Irda Journal April 09

Volume VII, No. 4

April 2009

Rural and Social Sectors - Huge Potential for Growth

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4/8/2009, 5:38 PM

Editorial Board J. Hari Narayan C.R. Muralidharan S.V. Mony S.B. Mathur S.L. Mohan Vepa Kamesam Ashvin Parekh Editor U. Jawaharlal Hindi Correspondent Sanjeev Kumar Jain Printed by Alapati Bapanna and published by J. Hari Narayan on behalf of Insurance Regulatory and Development Authority. Editor: U. Jawaharlal Printed at Kala Jyothi Process Ltd. (with design inputs from Wide Reach) 1-1-60/5, RTC Cross Roads Musheerabad, Hyderabad - 500 020 and published from Parisrama Bhavanam, III Floor 5-9-58/B, Basheer Bagh Hyderabad - 500 004 Phone: +91-40-66820964, 66789768 Fax: +91-40-66823334 e-mail: [email protected]

© 2007 Insurance Regulatory and Development Authority. Please reproduce with due permission. Unless explicitly stated, the information and views published in this Journal may not be construed as those of the Insurance Regulatory and Development Authority.

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From the Publisher

M

ost of the financial services in India in general, and insurance in particular; have remained limited mostly to the urban centres historically. For one thing, financial education had its own limitations; and for another, even the service providers could not reach the far flung places owing to reasons of viability and limited resources. The high costs of distribution that include traveling to remote corners of the country, building awareness among the rural masses, motivating them to insure their lives and assets etc. are all undoubtedly a great constraint that need to be overcome. It has been said time and again that there is need for innovation in impressing upon the masses in order that financial inclusion is accomplished in its truest sense. Insurers have been mandated to achieve preset targets from rural and social sector in their business figures in order to ensure that there is active participation of all the players in this very important domain. While these targets are only indicative, it is desirable to have all the players over-reach their targets and demonstrate that consolidating in these areas is a genuine business opportunity. It would also ensure that insurance penetration will take a quantum jump only when these resources are tapped.

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While these sectors are the ones that need the tenets of risk management to be implemented in toto, more often than not they remain excluded owing to several reasons. Innovation in designing products, in making them appeal to the masses and in making the masses realize the need for insurance is the need of the hour; although it is not as easy as it sounds. For awareness creation, various stakeholders have to put into use several methods that may not be very conventional but effective. Importantly, effort should be made to convey the message in a language and in a form that the downtrodden understand easily. This is a daunting task that needs a total commitment from every stakeholder. ‘Rural and Social Commitment of Insurers’ is the focus of this issue of the Journal. Marketing in financial services is in itself a huge challenge; and when it comes to insurance in the Indian domain, it is even more challenging. ‘Insurance Marketing’ will be the focus of the next issue of the Journal.

J. Hari Narayan

4/8/2009, 5:38 PM

I S S U E F O C U S

Going from Exclusion to Inclusion - P.C. James

13

Rural and Social Sector Insurance - K. Gopinath

17

- Pranav Prashad

20

Catalyst for Financial Inclusion

Partnering in Sustainable Livelihoods for Rural Youth - Avinash Kaur Lochan

22

FOLLOW THROUGH Statistics - Life Insurance

4

In the Air

6

26

Championing and Institutionalizing - Srinivasan Varadharajan and Shrinivas Susarla

Vantage Point U. Jawaharlal

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12

30

Customer Relationship - Rajesh Sud

40 43

RESEARCH PAPER

ÃÊ\Æ Nz˛ugÆÁ

44

Round up

46

33

Pilot Study on Morbidity Rates - G. N. Bhaskar Rau

Statistics - Non-Life Insurance 48

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from the editor

Steady Progress – Need for More

F

or ages, India has had the history of living in its villages. A vast majority of the people still owe allegiance to villages, despite the migration that is visible on an on-going basis, from rural areas to urban centres; in search of employment and gainful work. Such of those individuals who have made the rural areas their permanent abode depend mainly on agriculture or allied activities, village handicrafts and other professions that historically have been handed down, based mostly on social divisions. Barring the rich landlords, the people who have made agriculture as their prime occupation have had to face several hardships, owing to faulty rainfalls, crop failures, droughts etc. The other occupations had been equally non-fetching and a look at the average Indian village presents a none-too-pleasant picture. Similarly, even on the urban front, one gets to see a huge number of people – like the carpenters, plumbers, construction labour, just to name a few – depending on daily wages and not having a regular stream of income. They are constrained to continue within the poverty spiral, although the official figures of people living below poverty line may indicate otherwise. There have been attempts by the policy-makers to bring them all into the main line of activity through financial inclusion/poverty alleviation etc. Although we have been witnessing steady improvement in most areas, to claim that everything is hunky-dory would be ambitious. Insurance has not remained a priority for any of these sectors for obvious reasons. Ironically, the loss of the wage-earner or the loss of an asset for these sectors could be tremendous. As a part of encouraging financial inclusion, the insurers have been mandated with targets to be achieved from these sectors. The performance of most of the insurers tends to indicate whether they are looking at it as business potential, rather than as targets to be fulfilled, which is a very positive sign. One should admit that there is need for more. If there is a concerted effort on the part of all the stakeholders, it is not an impossible task; and one looks forward to great improvement being achieved in this area. ‘Rural and Social Sector Commitments of Insurers’ is the focus of this issue of the Journal. We begin the debate with an exhaustive detail of the account by Mr. P.C. James who delves into the need for commitment, in order to keep the movement going. In the next article, Mr. K. Gopinath discusses the geographical disparities and the high costs associated with spreading insurance in the rural side; apart from the need to identify new products and procedures in tune with the needs of the villagers. We have an article from Mr. Pranav Prashad in which he talks about the changes that need to be implemented to ensure that the rural poor are brought under the fold of insurance. In the end, we have an article by Ms. Avinash Kaur Lochan in which she elucidates the need for creating an environment that would be beneficial for most stakeholders, while spreading the safety net to the downtrodden. ‘Treating Customers Fairly’ has been one topic that has attracted the attention of various interest groups. In addition to the several viewpoints that we presented last month, we have a couple of articles more in this issue – in the ‘follow through’ section. In the first article, Mr. Srinivasan Varadarajan and Mr. Srinivas Susarla take into account the global scenario in the domain and suggest how it can be useful in adapting it to the Indian conditions. In the next article, we have Mr. Rajesh Sud giving us precious inputs on how a proper implementation of the principles of TCF can enhance the business figures as also market reputation. The second and concluding part of the research paper by Prof. G.N. Bhaskar Rau is included in this issue, apart from the usual monthly business statistics of life and non-life insurers. In a domain where insurance awareness is not at a very high pedestal, marketing is a huge challenge. ‘Insurance Marketing’ will be the focus of the next issue of the Journal. U. Jawaharlal

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0.77 87.87

Met Life Individual Single Premium Individual Non-Single Premium

12

0.91 86.06 3.17 5.00

1.02 47.98 0.00 2.85

4.17 190.18 0.09 12.55

29.45 462.61 4.73 125.08

14.51 189.19 2.91 0.54

2.27 76.09 2.18 7.15

41.62 234.75 22.24 47.65

22.99 264.41 4.64 1.26

0.74 54.05 0.54 0.06

16.57 105.48 0.03 0.49

11

10

9

8

7

6

5

4

3

2

44.64 257.20 0.84 30.23

February, 09

Bajaj Allianz Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium ING Vysya Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Reliance Life Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium SBI Life Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Tata AIG Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium HDFC Standard Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium ICICI Prudential Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Birla Sunlife Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Aviva Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Kotak Mahindra Old Mutual Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Max New York Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium

Insurer

1

No.

Sl

6.16 842.82

212.37 1359.75 7.64 16.26

16.78 949.45 32.19 57.70

35.42 558.10 0.05 18.47

33.03 1989.97 16.31 170.99

203.82 4565.52 186.64 969.39

134.08 1987.93 89.05 23.68

34.95 742.46 30.14 94.06

462.92 2276.95 241.44 1367.11

329.89 2480.26 84.30 26.05

21.29 531.52 12.58 17.89

369.46 3177.56 4.77 127.49

Up to February, 09

18.93 553.28

233.00 1009.96 0.00 38.67

26.43 682.72 22.90 52.98

20.25 792.74 1.79 23.65

24.12 1310.80 5.50 95.68

341.15 5641.19 234.04 548.38

118.86 1833.16 87.92 52.97

36.87 639.48 56.96 52.86

1040.40 1924.00 207.82 376.57

233.18 1521.23 229.59 22.22

24.10 518.76 3.84 2.52

566.38 4511.13 8.32 44.75

Up to February, 08

Premium u/w (Rs. in Crores)

142 30627

741 80676 0 16

142 27422 1 24

148 23340 0 6

11931 127111 0 15

2585 228359 6 6

2139 90412 16 0

480 58366 0 4

7935 80292 0 16

4974 233053 0 25

98 30105 0 2

8335 199178 2 92

February, 09

1928 250843

14139 1035910 10 312

2159 445017 11 343

4254 304900 0 66

141883 922493 1 169

32730 2356881 194 325

40341 780658 137 9

7262 595684 7 67

82014 681637 5 111

78859 1786277 20 303

2622 300217 1 97

89142 2132077 7 650

Up to February, 09

2903 179047

14711 672872 0 269

3504 235091 2 221

3057 316138 0 101

86615 413921 3 110

54787 2458944 141 302

229203 609001 136 44

6516 398899 4 64

144899 588265 0 57

54160 791879 49 236

2615 290915 1 20

79453 3019546 0 288

Up to February, 08

No. of Policies / Schemes

3 12149

7921 19822

0 85285

67 20832

63163 26351

16755 38

2389 12314

30261 341885

55 22863

246 4669

259065 684869

February, 09

206662 216995

118705 461384

66 986394

41700 235449

630524 563885

193655 15848

80093 294395

187836 5170811

46641 608280

5254 61233

263607 6243397

Up to February, 09

0 474091

163868 402752

1038 597700

6946 139804

495478 396454

168736 37060

335164 195336

102974 1069280

77790 344511

799 92506

6474 1212485

Up to February, 08

No. of lives covered under Group Schemes

First Year Premium of Life Insurers for the Period Ended February, 2009

Report Card:LIFE

statistics - life insurance

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Met Life Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Sahara Life Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Shriram Life Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Bharti Axa Life Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Future Generali Life Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium IDBI Fortis Life Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Canara HSBC OBC Life Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Aegon Religare Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium DLF Pramerica# Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Star Union Dai-ichi @ Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Private Total Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium LIC Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium Grand Total Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium 20472.03 14128.91 9282.30 0.00 22617.76 36467.59 10029.93 2901.84

2067.37 3668.82 710.16 233.58

2145.73 22338.68 747.63 2901.84

203.84 2171.71 45.83 233.58 1863.54 1497.11 664.33 0.00

0.48 1.21 0.00 0.00

0.00 1.48 0.00 0.00

2.19 20.73 0.00 0.00

5.94 216.24 0.00 0.00

97.77 125.57 0.00 0.02

3.57 64.43 0.10 12.25

4.80 232.75 7.53 0.00

130.01 150.40 0.00 0.46

40.81 63.61 0.00 0.02

6.16 842.82 34.90 0.00

212.37 1359.75 7.64 16.26

0.48 1.21 0.00 0.00

0.00 0.69 0.00 0.00

0.55 5.06 0.00 0.00

1.87 36.23 0.00 0.00

13.28 12.68 0.00 0.00

0.67 20.50 0.03 0.64

0.27 25.07 1.39 0.00

3.86 8.37 0.00 0.06

3.19 6.02 0.00 0.00

0.77 87.87 3.04 0.00

16.57 105.48 0.03 0.49

21434.37 41072.11 8151.51 1313.10

18557.11 19893.75 7274.46 0.00

2877.25 21178.36 877.05 1313.10

0.00 0.13 0.00 1.83

3.27 80.63 1.77 0.00

154.06 103..32 0.09 0.00

36.26 55.83 0.00 0.00

18.93 553.28 16.51 0.00

233.00 1009.96 0.00 38.67

289586 3878524 1716 218

244954 2607283 1670 0

44632.00 1271241.00 46.00 218.00

95 501 1 0

0 626 0 0

923 3213 0 0

126 4653 0 0

1849 5025 0 0

151 15445 0 12

28 18009 1 0

793 7901 0 0

1017 6927 0 0

142 30627 19 0

741 80676 0 16

Note: 1.Cumulative premium / No.of policies upto the month is net of cancellations which may occur during the free look period. 2. Compiled on the basis of data submitted by the Insurance companies. 3.# Started operations in September, 2008. 4.@ Started operations in February, 2009.

22

21

20

19

18

17

16

15

14

13

12

Individual Single Premium Individual Non-Single Premium Group Single Premium Group Non-Single Premium

5331142 35034627 17780 2531

4782957 22977756 17234 0

548185.00 12056871.00 546.00 2531.00

95 501 1 0

0 1694 0 0

1126 17379 0 0

411 24515 0 0

15321 44053 0 1

757 56841 1 66

1013 160727 3 0

20808 83519 0 3

11321 75048 0 9

1928 250843 148 0

14139 1035910 10 312

5796263 34613463 19884 1727

5076191 24441175 19485 0

720072.00 10172288.00 399.00 1727.00

0 53 0 7

537 58265 1 0

27781 63209 3 2

9331 76243 0 6

2903 179047 59 0

14711 672872 0 269

2181346 1254124

1773891 0

407455.00 1254124.00

101 0

0 0

0 0

0 0

0 3277

143 7100

1564 0

0 12670

0 0

25722 0

3 12149

30072829 15166400

27974250 0

2098579.00 15166400.00

101 0

0 0

0 0

0 0

0 19585

563 249560

29263 0

0 38414

0 770

293909 0

206662 216995

20167682 5030117

18615869 0

1551813.00 5030117.36

0 67244

817 0

9458 623

0 271

182271 0

0 474091

statistics - life insurance

in the air CIRCULAR February 11, 2009

Circular No:37/IRDA/GRM-Cir (L)/2009

To

o Insurance claim that has been rejected or dispute of a claim on legal construction of the policy

All Life Insurers,

o Delay in settlement of claim

It has come to the notice of the Authority that information on the Insurance Company’s Grievance Redressal Mechanism as well as the Insurance Ombudsman is not communicated properly to the policyholders. It is hence felt necessary to prescribe a common format on this aspect which would enable disclosure of specific information to policyholders and beneficiaries. It is advised that the following information at a minimum should be sent to all policyholders with the policy document.

o Dispute with regard to premium o Non-receipt of your insurance document Address of the Insurance Ombudsman: _______________________________________________________ _______________________________________________________ _______________________________________________________ Contact No:______________________________________________ Email ID: _______________________________________________

1. In case you have any query or complaint/grievance, you may approach our office at the following address:

4. The complaint should be made in writing duly signed by the complainant or by his legal heirs with full details of the complaint and the contact information of complainant.

_______________________________________________________ _______________________________________________________ _______________________________________________________ Contact No:______________________________________________ Email ID: _______________________________________________

5. As per provision 13(3)of the Redressal of Public Grievances Rules 1998, the complaint to the Ombudsman can be made • only if the grievance has been rejected by the Grievance Redressal Machinery of the Insurer

2. In case you are not satisfied with the decision of the above office, or have not received any response within 10 days, you may contact the following official for resolution:

• within a period of one year from the date of rejection by the insurer

_______________________________________________________ _______________________________________________________ _______________________________________________________ Contact No:______________________________________________ Email ID: _______________________________________________

• if it is not simultaneously under any litigation. Please take necessary action in this regard and confirm the same to the Authority. (G. Prabhakara) Member (Life)

3. In case you are not satisfied with the decision/resolution of the Company, you may approach the Insurance Ombudsman at the address given below if your grievance pertains to:

PRESS RELEASE February 20, 2009 The Department of Industrial Policy and Promotion (FC Section), Ministry of Commerce & Industry, Government of India, vide Press Note No.2 (2009 Series) dated 13th February, 2009 has issued Guidelines for calculation of total foreign investment, i.e., direct and indirect foreign investment in Indian companies. These guidelines are effective from the date of the issue of the Press note.

held by a foreign company is laid down in clause 11 of the IRDA (Registration of Indian Insurance Companies) Regulations, 2000, the Press Note under reference has excluded the insurance sector from the methodology as detailed there under. Thus, the insurance sector has been left out of the purview of the said methodology and shall continue to be governed by the provisions of the relevant Insurance Laws and Regulations.

While concerns have been expressed in some quarters, it is clarified that in case of Indian insurance companies, in view of the fact that the manner of calculation of twenty six per cent equity capital

(J. Hari Narayan) Chairman

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in the air CIRCULAR February 26, 2009

Circular No. 39/IRDA/AML/CIR/FEB-09

To

3.1.8 (ii) “For integrally related transactions, premium amount greater than Rs. 50,000 in a calendar month should be examined more closely for possible angles of money laundering. This limit will apply at an aggregate level considering all the roles of a single person – as a proposer or life assured or assignee”.

All the Insurers Dear Sir/Madam, Sub: Cash Acceptance Threshold for Premium/Proposal Deposit Remittances

2. The Authority is concerned on certain instances that have come to its notice wherein it was observed that the aforementioned clauses are being selectively interpreted by insurance companies for compliance on individual transaction basis and consequent splitting of the insurance policies/issue of number of policies to one or more entities has facilitated individuals to defeat the spirit of the AML guidelines.

We invite your attention to the following instructions included in the Anti Money Laundering (AML) guidelines detailing the ceiling limits for cash deposits in insurance transactions. It may be observed therefrom, that the instructions emphasize strict adherence to the ceiling, with the clear focus to check possible attempts of money laundering and consequently require compliance with both the letter and spirit of our guidelines: 3.1.8 “With a view to ensuring that premiums are paid out of clearly identifiable sources of funds, it has been decided that remittances of premium by cash should not exceed Rs.50,000. It would be advisable for the companies to evolve even lower thresholds for cash transactions”.

3. All insurers are therefore advised that the cash acceptance thresholds should be applied as indicated and where there is possibility of the transactions being integrated through a single remitter, the insurer should refuse to accede to the requests for cash deposits. The Authority will be constrained to take serious action against the insurers where the violations of AML framework are permitted with their tacit approval.

3.1.8 (i) “Premium/proposal deposits beyond Rs.50,000 should be remitted only through cheques, demand drafts, credit card or any other banking channels”.

Yours faithfully, (C.R. Muralidharan) Member

CANCELLATION OF BROKER LICENSE 5th March, 2009

IRDA/DB-067/03

To The Principal Officer, M/s. Protect Insurance Services (India) Pvt. Ltd., 604, Vishvananak, ICT Link Road, Chakala, Andheri (E), MUMBAI - 400 099.

WHEREAS, the Broker has given an undertaking to service the existing clients whose policies are in force for a period of six months from date of cancellation of license as required under Regulation 40 of the IRDA (Insurance Brokers) Regulations, 2002, within which it has to make suitable arrangements with another licensed broker to service the contracts already concluded.

Dear Sir,

WHEREAS, the Broker vide its letter dated 26.12.2008 submitted the original license No.138 for cancellation.

Sub : CANCELLATION OF BROKER LICENSE NO 138.

NOW THEREFORE, pursuant to the request made by the Broker for surrender of Broker License, the Authority hereby cancels the Direct Broker License No.138 granted to M/s. Protect Insurance Services (India) Pvt. Ltd with immediate effect.

WHEREAS, M/s. Protect Insurance Services (India) Pvt. Ltd., (hereinafter referred to as the ‘Broker’) having its Registered Office at Kachwala Building, 3rd Floor, Opp: old Passport Office, 266, Dr. Annie Besant Road, Prabhadevi, Mumbai 400 025 has been granted license by the Authority to act as a Direct Broker in the field of general insurance vide License No.138 on 1st April, 2003 and renewed till 31st March, 2009 pursuant to the provisions of the IRDA (Insurance Brokers) Regulations, 2002.

The Broker is advised to remit annual fee payable for the year 2008-09 after finalization of accounts and as prescribed under Schedule II of IRDA (Insurance Brokers) Regulations, 2002 and as amended vide IRDA (Insurance Brokers) (Amendment) Regulations, 2007.

WHEREAS, the Broker vide letter dated 4th November, 2008 communicated to the Authority that it would like to discontinue as Direct Insurance Broker with immediate effect.

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(Prabodh Chander) Executive Director

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in the air CIRCULAR 13th March 2009

Circular No. 42/IRDA/ACTL/EM/2008-09

To

b.This table must also show all payments made to any other party, related to the intermediaries mentioned above. This table should also indicate the total amount of business procured through them during the period of reference.

All the Life Insurance Companies Sub: Expense management of life insurance companies.

c.The definition of related parties mentioned above should be in conformity with the Accounting standards of ICAI and Companies Act.

As indicated on a number of occasions, expenditure management is very crucial for the life insurance industry especially at this juncture, in order to procure durable business and position them on a strong footing. In this context, payments made to the intermediaries, other than individual agents, occupy an important position. Hence life insurers are required to submit the following, starting from the financial year ending March 31, 2009.

d.This certificate will be jointly signed by the CEO. CFO and Compliance Officer. The IRDA reserves the right to ask external auditors of the life insurers to certify these statements.

a.The life insurer must give the details of all the payments made by the company, during the year (April-March), to all intermediaries, except individual agents in a separate table, as given in the Pro forma enclosed. This table must be sent along with the Appointed Actuaries Report.

sd/(R. Kannan) Member Encl: Table

Name of the Life Insurer

Date...................................

Intermediary-wise details of premium collected and expenses incurred, under each distribution channel, during the financial year 2008-09 (excluding individual agnets) Premium Collected 1 Distribution Channels A

Corporate Agent Name 1 Related party 1 Related party 2 Name 2 Related party 1 Related party 2

B

Brokers Name 1 Related party Related party Name 2 Related party Related party

C

D

Referrals Name 1 Related party Related party Name 2 Related party Related party

FYP

RP

Commission Paid 2

SP

Top-up

FYP

RP

SP

Top-up

All other payments made Accounted Amount under 3

1 2 1 2

1 2 1 2

Others (specify) Name 1 Related party 1 Related party 2 Name 2 Related party 1 Related party 2

E Direct Sales Note 1. Premium as per Schedule 1 of financial statements 3. Name of particualr account as per Schedule III of financial statements FYP - First Year Premium RP - Renewal Premium Signature of Compliance Officer

SP - Single Premium Top-up - Top-up Premium

Signature of Chief Financial Officer

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2. Commission paid as per Schedule 2 of financial statements

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Signature of Chief Executive Officer

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in the air CIRCULAR March 13, 2009

Circular No: 43/IRDA/ACTL/ASM/2008-09

To

has been decided that all life insurers are required to submit the statement of scrip-wise details of investments supporting various categories of assets mentioned therein. The proforma of the statement to be submitted is given in the Annexure. The statement should be submitted along with the actuarial valuation reports for the year ended March 31, 2009 onwards.

CEOs of Life Insurance Companies Dear Madam/Sir Subject: Scrip-wise details of investments available for arriving at the “Available Solvency Margin”

sd/(R. Kannan) Member

This has reference to the submission of Form IR.DA-ASSETS-AA as per IRDA (Assets. Liabilities and Solvency Margin of Insurers) Regulations, 2000. In addition to the submission of the above referred statement, it

Encl: Annexure

Annexure: Name of the Life Insurer:

Policyholders’ funds Scrip-wise Investments as at March 31, 2009

(in rupees lakhs) Date of Purchase

No. of Units held as at March 31, 2009

Book Value as at March 31, 2009

Category of Asset: Approved Securities Name of scrip ................ Category of Asset: Approved Investments Name of scrip ................ Category of Asset: Deposits Name of scrip ................ Category of Asset: Non-Mandated Investments Name of scrip ................ Category of Asset: Other Assets – Specify Name of scrip ................

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Market Value as at March 31, 2009

in the air Shareholders’ funds Scrip-wise Investments as at March 31, 2009

(in rupees lakhs) Date of Purchase

No. of Units held as at March 31, 2009

Book Value as at March 31, 2009

Market Value as at March 31, 2009

Category of Asset: Approved Securities Name of scrip ................ Category of Asset: Approved Investments Name of scrip ................ Category of Asset: Deposits Name of scrip ................ Category of Asset: Non-Mandated Investments Name of scrip ................ Category of Asset: Other Assets – Specify Name of scrip ................ Signature of Appointed Actuary

Signature of Chief Financial Officer

Signature of Chief Executive Officer

Company seal Date:

CIRCULAR March 17, 2009

Circular No.043/IRDA/CIR/Compliance/Mar-2009

Sub: Issuance of ESOP/ Sweat Equity to CIO / Managing Director / Whole-time Director – Compliance with Section 34A of the Insurance Act, 1938.

to Managing Director / Chief Executive Officer / Principal Officer / Whole-time Director, then I.

In partial modification of the para (3) and (4) of Form C of Circular No.031/IRDA/C1R/CGMPLIANCE/AUG-20G7 dated 23.08.2007, it is now clarified that the issuance of ESOP/ Sweat Equity to Chief Executive Officer / Managing Director / Whole-time Director / Principal Officer would be governed by the following norms:

If the CEO / Managing Director / Whole-time Director/ Principal Officer is one of the promoters or directly related to the promoters, then the same will be governed by the provisions of SEBI (Issue of Sweat Equity) Regulations, 2002 except those relating to pricing of the shares.

II. In other cases, the same will be governed by the SEBI’s ESOS guidelines as amended by the SEBI from time to time except the pricing of the shares.

1. In case of shares of a promoter/ group / associate companies (whether listed or otherwise) is issued to CEO / WTD/ Principal Officer / Managing Director, then the same will be governed by the provisions of the SEBI as may be applicable to that promoter / group company.

All other provisions / terms and conditions of the circular No. 031/IRDA/CIR/COMPLIANCE/AUG-2007 shall remain unchanged. Please Acknowledge receipt and ensure strict compliance of the aforesaid.

2. In case shares of the insurance company are issued as Sweat Equity, then the same will be governed by the provisions of the Sweat Equity Regulation issued by SEBI except for the guideline relating to pricing of shares.

sd/(CR Muralidharan) Member

3. In case of shares of insurance company are offered as ESOPs

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in the air ORDER THE INSURANCE REGULATORY AND DEVELOPMINT AUTHORITY (IRDA)

your request vide dt. 22.08.2008 & 04.12.2008. The last hearing on 02.01.2009 was attended by your CEO Shri G P Sureka.

AGAINST

9. That during the hearing on 02.01.2009 your CEO had admitted that your company had indeed violated the directions of the Authority In respect of rescheduling of your loans and advances. The admission is recorded in the minutes of the proceedings held on 02.01.2009 signed by your CEO.

M/s UNIVERSAL MEDIAID SERVICES LIMITED The Authority, after examining your application dt. 11.02.2008 for the renewal of your TPA licence No. 009, observes the following: 1. That your company was granted a licence by IRDA to act as Third Party Administrator (TPA) in March, 2002. The licence was further renewed up to March 2008.

10. That, vide your dt. 04.12.2008 you had admitted that you had violated the circular No. Q22/IRDA/MV/G5 dt. 25.08.2005 in respect of change in shareholding of your company and have requested to condone the same.

2. That your company had made certain loans and advances during 2003-04 to companies not connected with the TPA business, which in the blocking of the working capital required for the TPA business.

11. Further that you had also that you were processing claims of some corporates (MMTC & RITES) directly and not through any insurer, which is in violation of the TPA Regulations.

3. That your company was advised by the Authority vide letter dated 16th June 2005 and subsequent letters dated 17th August 2005 and 5 th October 2005 in this regard, to withdraw the loans and advances and deposit the same in scheduled banks, to be available for the working requirements of the TPA business.

12. The Authority has the submissions made till date, about January, 2009 by you. Upon a consideration of the same as also the facts and circumstances of tie case and the material on record, what stands out clearly, especially from the events that transpired and which have briefly above, is the blatant disregard of your company, despite being a registered entity, to adhere to the instructions issued by the regulator in the of the policy holders.

4. That you sought time limit and further extension thereof in order to comply with the directions of the Authority. 5. That you were advised to show cause, vide our letter dt. 19.08.2008 as to why your application for renewal of your TPA licence should not be declined. And that your reply dt. 22.08.2008 to the show cause denied that you had violated any provisions of the TPA Regulations or any directions issued by the Authority.

13. In view of the above, the Authority has come to the conclusion that your application for renewal of your TPA licence (No. 009) should be declined. 14. In exercise of the powers conferred by Regulations 13 & 14 of the IRDA (Third Party Administrators – Health Regulations, 2001, therefore, the Authority hereby declines the application for of TPA licence no 009 of M/s Universal Mecti-Aid Services Pvt Ltd.

6. That your reply contained certain contradictory submissions about the status of loans and advances made by your TPA in so far as that while the letter indicated that the money (advanced) could be called back as and when required, it also said that the new date of renewal of the short term loans and advances fell on or before 31.03.2009, hence you may be granted extension of time up to that date.

Subsequent to the non-renewal of the TPA licence, M/s Universal Medi-Aid Services Pvt. Ltd. is hereby directed to comply with the following: a. Submit immediately, the data collected and the books, records or documents, etc, relating to the business carried on by it in relation to different insurers, to the respective insurers. b. Support insurance company(ies) in making suitable alternative arrangements to service the policyhoiders in of whom the policies are still in force. c. Reconcile and the accounts with the insurance companies and service providers.

7. That the Authority had also conducted an inspection of your company in Aug, 2008 and findings of the same were communicated to you vide letter dt. 02.12.2008. Your company had responded vide dt. 04.12.2008 providing explanations for the queries and also of having reinvested the amount recalled from Safal Constructions in to other companies, having made changes in the shareholding pattern without prior approval of the Authority, servicing corporate clients directly and not through any insurer and also for an opportunity for a personal hearing.

Date: 6th March, 2009 (Prabodh Chander) Executive Director

8. That you were given an opportunity for a personal hearing on three occasions, the last being on 02.01.2009 pursuant to

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vantage point

Marketing Insurance in an Emerging Domain CHALLENGES UNLIMITED U. JAWAHARLAL EMPHASIZES THAT ALTHOUGH INSURANCE MARKETING IS A CHALLENGING PROPOSITION IN INDIA, A PROFESSIONAL APPROACH WILL GO A LONG WAY; AND CAN CLINCH THE DEAL IN FAVOUR OF THE INSURERS.

M

arketing an intangible product has its set of complications, especially in a domain where the average mindset is to look for short term gains, and in a tangible form, at that. The financial services industry in India has been making rapid strides of progress over the last several years. Within the financial services, some areas like banking, capital markets and mutual funds have fared a great deal better as compared to insurance which still remains mostly to be sold. For ages, insurance, particularly in the personal lines, has remained out of the choice of individuals – for inexplicable reasons. In the liberalized environment, this trend has begun to be reversed, although we are far from a position that can be called comfortable. In the domain of life insurance, the comfort of a joint family system that took care of the financial fall-out of the breadwinner’s demise still looms large over

several families, although there has been a major social transition to nuclear families. In the case of health insurance, the problems are even more pronounced owing to the fact that the realization of the need for insurance strikes late, usually after an episode of health-related catastrophe. While it is not very difficult to understand this phenomenon in the lesseducated circles, it is ironical that even some highly literate individuals fail to understand the importance of having in place a suitable health insurance policy. The role of insurance as a risk-management tool is one thing that needs to be totally digested so that insurance marketing becomes a greatly less-complicated exercise. Looking at the other side of it, there is need for appreciating that need identification of the client, followed by a need-based selling are of paramount importance not only in acquiring business

but more importantly in sustaining it over a longer term. Further, there should also be emphasis on the client making an informed decision upfront. All this presupposes that the marketing person is himself or herself highly conversant with the nuances of services that are being offered; and ensures that a high level of professionalism is what is targeted rather than a mere sale. Training the marketing personnel on an on-going basis should be at the top of the agenda for all insurers in order to achieve consistent growth. Such aspects as the amount of insurance, type of the product etc. need to be properly explained to the client so that heartburn at a later stage is precluded. ‘Insurance Marketing’ will be the focus of the next issue of the Journal. The complexities involved in dealing with this challenging task will be discussed threadbare by several practitioners.

A Professional Approach in Marketing Insurance in the next issue...

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issue focus

Going from Exclusion to Inclusion NEED

FOR

FACILITATING

THE

EXERCISE

P.C. JAMES AVERS THAT THE PERMISSION GIVEN TO NGOS, MFIS AND SHGS TO SELL AND SERVICE MICRO INSURANCE PRODUCTS CAN SERVE AS A GREAT TURNING POINT IN THE UNIVERSALIZATION OF INSURANCE.

I

t is well recognised that the availability and affordability of insurance protection is a necessary requirement for the sound functioning of a modern economy. Therefore there is an urgency for insuring everyone across their many unforeseen risks in order to ensure security and sustainability at multiple levels, namely individual, family, community, commercial (to ensure credit flow, to meet legal liability etc.), at society and country level. In any analysis of financial exclusion, it may be seen that there is a general tendency to exclude persons on two parameters – one on the basis of social segmentation and the other on the basis of geography (rural) (Figure – I).

SOCIAL EXCLUSION

Figure - I

PART INCLUSION

FULL INCLUSION

NO / POOR INCLUSION

PART INCLUSION

GEOGRAPHICAL EXCLUSION

It is not the poor only who are excluded. There is a distinction between exclusion based on poverty and on social norms. Poverty means non-access to economic goods due to lack of resources. Social exclusion points to inadequate or unequal participation in social life, or exclusion from a place in the normal consumer ladder. These two dimensions of deprivation are visible in almost all societies and communities. The economic and social gradient can reflect various degrees of exclusion from the instruments of economic development leading to various deprivations. There can be many real or prejudicial reasons for such exclusion. In insurance, there can be a tendency to take refuge in the conditions of insurability, of heightened perceptions of adverse selection and moral hazard, as well as high cost of marketing and administration, the lack of literacy and poor infrastructure etc. so as to stay away from certain segments of the population and geographies. Traditionally, world over there have been instances of insurers practicing subtle forms of exclusion termed ‘redlining’; and in many jurisdictions these practices are forbidden and insurers are expected to take necessary affirmative action. The policy of inclusion begins to make sense if one were to take into consideration

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that there is a natural tendency for people to shape their risks in their own informal and tentative manner. In the agrarian economy, for instance, farmers adopt a number of strategies to cope with agricultural risks. These include crop and field diversification, non-farm employment, strategic migration of family members etc. In cropping practices, risk hedging includes growing a diverse mix of crops, using more pesticides, and undertaking simultaneously supplementary economic activities like keeping milch animals. Higher forms of management included growing of less risky crops, growing of less risky varieties, improving the quality of seeds, increasing the irrigation facility, pre-selling the crop at fixed prices, undertaking contract farming etc. In the area of health, individuals and households use informal risk sharing arrangements, postpone treatment, approach quacks, draw down savings, sell assets, borrow or go into debt to cover treatments. These make it clear that rural and the poor are aware of risks and wish to migrate to more effective risk management practices. It can be seen that the traditional coping mechanisms have considerable fragility and informality. The values needed to join mainstream economic progress require

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issue focus more sophisticated tools to sustain investments and increase prosperity. Bringing in the modern forms of credit, savings and insurance have exponential effects on the welfare of the excluded. Economists are agreed that uninsured risks have substantial welfare costs. The values that insurance can bring to the lives of the excluded far exceed the tangible benefit of indemnity. Modern insurance exposes the vulnerability of unmanaged and under managed risks to help to draft proper management and insurability frameworks which can encourage people towards managed risk taking in economic activity and development. People are thus enabled to jettison lower order approaches of economic activity and obtain increasing economic returns. The organised industrial world had taken to risk containment early in its history. Accident, disease and disability risks that dominated the early industrial landscape had compelled the need for safety nets to be created by employers or the state, such as seen in the formation of sickness funds and social insurances; as also the legislation of compulsory liability insurances such as the workmen compensation insurance and motor third party insurance. In informal sectors, such protection did not exist and disaster relief was considered normal when societal level disasters and distress took place. Post disaster relief however has been found to be not optimal as it has many shortcomings including weakening of the fiscal balance and creating a dependency by those affected to look for grants and aid than create risk proofing robustness; and more tragically, such benefits often may not reach the actually distressed for whom the relief was intended. Therefore there is a clear need for inclusion of all in the financial service sector loop to bring in a whole host of modern inputs to promote a virtuous cycle of economic and social development. There are a range of unmanaged risks that

affect the various informal sectors of the economy which are often lacking various traditional insurability conditions including availability of data as well as having the

Figure - II PROTECTION PARADIGMS Occupational

Multitasking, diversification

Household

Extended family units

Community

Local assistance

Other informal

Cooperative approaches

Disaster relief

Ex-post by government

EX ANTE RISK MANAGEMENT / INSURANCE Free insurance

Government paid

Part free insurance

Subsidised

Full paid insurance

Paid by beneficiary

Administered schemes

Government schemes

Quasi insurances

Limited indemnities

Index insurance

Parametric insurances

Area insurance

Area rated indemnities

Group covers

Community, ‘as if’ rates

Full individual insurance

Individually underwritten

Input cost insurance

Based on cost of cultivation

Economic value insurance

Full economic value

Reinstatement insurance

Today’s replacement cost

Compulsory insurance

State notified

Loan linked insurance

Bank loan linked

Employment based

Employer sponsored

Solidarity based

Group solidarity

Voluntary/optional

Individual choice based

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premium paying capacity. This has seen the use of diverse approaches in carrying protection to these segments as shown in Figure - II:

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issue focus Given the many favourable factors and options available now owing to the many developmental initiatives taken, there is a clear need to move away from tried and traditional approaches of protection and introduce insurance not only in new untapped areas but also to multiply product options where suboptimal products exist so that the unique needs of various communities and geographies are increasingly satisfied according to the beneficiaries’ real need. There can be many barriers to achieving this objective. These may include literacy and awareness barriers, distributional hurdles, organisational difficulties, product limitations and choice options, service complexities, cost burdens, premium paying and collection problems, issues in titles, documentation, inspection, disclosures and so on. All these need to be examined and dealt with at company and industry level. A new grammar of inclusion needs to be developed that can holistically look at the phenomenon of exclusion. Many inputs such as the following are needed. • Marketing. New and appropriate intermediaries need to be empowered to cross the barriers of exclusion. Insurance regulation in India has fortunately taken proactive steps to permit the use of a wide variety of intermediaries. Particularly heartening for the rural and social sector is the rise of organised intermediaries such as bancassurance, cooperatives, panchayats and other rural institutions and the possibility that they can carry out a multiplicity of intermediary services including insurance in a cost effective manner. More importantly the permission given to NGOs, MFIs and SHGs to sell and service micro insurance products can serve as a great turning point in the universalization of insurance. Encouragement need to be given to offer a bouquet of products across insurers possessing specialised domain expertise. • Capacity

building,

creation

of

awareness including prioritisation in taking covers. Insurance is a complex service product, difficult to understand and having a wide variety of facets and is couched in difficult language. Thus insurance literacy at various levels – insurers own retail staff, at intermediary, group/community, and individual level becomes necessary to avoid an unnecessary backlash owing to misselling and wrong selling. • Affordability of premium, value for money focus and payment schedules. In informal sectors cash availability to pay varies considerably between occupations. People are paid daily, weekly, monthly or on harvesting, and hence cash flows vary. Intermediary services in collection, savings, premium financing, and timely payment of premiums are required. More essentially covers like crop insurance and health insurance necessarily carry higher risk and higher rates, and premium paying capacity needs to be built up to obtain coverage, and need to be coupled with governmental and other donor initiatives to offer subsidies and assistance. • Product design. A beginner in insurance requires special considerations as not only are the livelihoods of the excluded fragile but their initiation into such complex service products are slow and often uncomprehending. Thus removal of cumbersome procedures, forms, and individual rigorous underwriting procedures can be replaced with group or area approaches, community rating, the use of certificates and master policies, use of vernacular, and other innovations that simplify services, offer real benefits, increase contract certainty and speed up claim settlement. • Adapting the product to special conditions. There are certain universalities in insurance products. Thus everyone is aware of the broad features of personal accident insurance. However the product will come alive into the real needs of consumers only by tweaking the product to suit the segmental or

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geographic requirements. Thus one can observe that the personal accident policy for the organised factory worker needs to be modified when being offered to a farmer or fisherman. Between risks, permanent total disablement benefit should be much higher than the death benefit. Similarly, in a policy for women as seen in the Rajarajeshwari policy, it may be more advantageous to pay for the accidental death of the spouse, rather than self in case of death; and in case disablement, the cover pays for the disablement of the insured beneficiary. • The service assurance. Insurance is all about service. Protection of the policyholder requires compliance with a number of obligations. Competitive differentiation requires further excellence in ensuring ease in obtaining the required services. Rent seeking behaviour that can easily creep in where the uncomprehending are involved, has to be cut out ruthlessly. Thus the tendency to collect fictitious charges for getting a claim form or in getting an estimate, or charges for inspection services all mar the image of the service provider and need to be monitored for ensuring that they do not take place. Similarly the costs of delay easily defeat the trust and confidence of fragile customers. • In this regard the use of IT brings in expectation of lowering informational barriers, makes access easy, and brings in much greater speed, responsiveness and transparency. Online tracking of service issues, uploading of relevant information and being available 24x7 should compel insurers bring online services even in the remotest areas through hand held devices and common service centres. • Beyond insurers the general service infrastructure need to be upgraded to play a facilitating role and many initiatives are possible using relevant partners to provide them. Services such as having a bank account, having access to clear asset titles, identity proofs,

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issue focus access to telephones and internet, facility to file FIRs, to talk to insurers and file claims through call centres or online etc. are all part of a facilitating environment to obtain proper benefits from services. Beneath such details, which are important and need to be drilled down further, certain fundamentals need to guide them. The first is that rural/social insurances need to work on the solidarity and community platform for the various benefits that can be accrued there from. Luckily almost everyone is or can be connected on the basis of group/area/ social/ political unit basis, and can have a group organiser, local centre, or self-help network. Solidarity approaches offer many benefits such as: • Reduction of costs in marketing and awareness creation by group selling. • Avoidance or reduction in the need for individual underwriting and related paperwork. • Reduction in adverse selection (hidden information) and moral hazard (hidden action) as the community takes on certain disclosure and control responsibilities.

• Community or group rating reduces costs on both sides and experience rating can keep the group from making unnecessary claims and generally reduce claims cost. • Better service assurance on the strength of the group. MOUs can clarify most issues such as whether claims will be in cash or kind, whether repair/ reinstatement, or cashless or reimbursement settlement etc. • Solidarity can be built up to ensure that the value and sustainability of insurance is enhanced over time. Similarly end to end insurance covers, if offered, can achieve multiple objectives. Prices can be as low as possible, and choices as wide as possible, and offer options and choices to beneficiaries. Thus a cover matrix need to be set up with multiple risk cover providers in conjunction with group approaches to provide cost and options benefits (see Figure - III): Solidarity based approaches based on shared objectives involving beneficiaries, local partner institutions and insurers can help to align demand for insurance with the supply requirements and ensure better sustainability and success, and help the

Figure - III : COVER MATRIX

BACK TO BACK HOLISTIC COVERS

HIGHER CHOICE OPTIONS

HIGHER CHOICE LESS COSTS

HIGHER COST LOWER UTILITY

LOWER COST

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Finally, in moving to insurance solutions, a proper risk management paradigm with the participation of all concerned can help to improve understanding and reach better solutions. These include: • An in-depth analysis of the risks that are faced, their causes and management possibilities to control and minimise them internally. • Analysis of the frequency and severity of the risk and their financial consequences on individuals and the community. • Preparedness to make such risks insurable and to ensure that insurers find the risks clearly identifiable and measurable. • To study the costs of the risk and the affordability of the premium that is estimated. The possibility that governments and other promotional authorities can subsidise higher rated risks can be factored in to make the scheme a win-win for both parties. • The benefit and service package need to be analysed, discussed and agreed upon. • The beneficiaries must align with the group organiser and the insurer to minimise losses, reduce adverse selection/moral hazard and ensure renewal so as to ensure the sustainability and upgradation of the cover to suit the beneficiaries even better. The promise of inclusion is alluring and makes business sense in the face of increasing demand for financial products. The facilitation factors and technologies are gradually falling into place. The time has come therefore to make it an industry level movement to universalise the benefits of risk protection to all.

The author is General Manager, AIC of India Ltd. The views expressed in the article are his own.

GROUP / CONNECTIVITY ARRANGEMENTS

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relationship to move up the value curve for better developmental results.

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issue focus

Rural and Social Sector Insurance OPERATIONAL MANAGEMENT K. GOPINATH WRITES THAT WHILE THERE ARE PROBLEMS OF ADVERSE SELECTION AND POSSIBLE INHERENT FRAUD ASSOCIATED WITH SEVERAL CLASSES OF RURAL INSURANCE, THEY CAN BE OVERCOME WITH A LITTLE MORE APPLICATION AND PERSUASION.

“Improving the lives of the billions of people at the bottom of the pyramid is a noble endeavor. It can also be a lucrative one” – C.K. Prahalad

7

0% of India live in rural areas but have no access; or have negligible access to insurance. Due to wide

geographical disparity and high distribution

costs, insurers have been chary of venturing into this territory. Coupled with a tariff regime which assured them of good profits, they had been concentrating only on the urban market. The IRDA notifications regarding obligations of insurers to rural and social sectors have forced the insurers to look at this hitherto unexplored market. With detariffing and recession affecting the premium income and profitability of the insurers, it has become extremely important to look for blue oceans and develop new markets. With increasing rural incomes and

With detariffing and recession affecting the premium income and profitability of the insurers, it has become extremely important to look for blue oceans and develop new markets.

improving infrastructure, rural and micro insurance offers immense possibilities. But with opportunities, this sector throws various operational challenges as well, for the insurers. We will be looking at some of these challenges and some possible solutions. Product Challenges – Currently there is not much differentiation of products for urban and rural markets. The products have been designed as “one size fits all”. This needs to be relooked. The product designers have to understand the needs of the target population and design accordingly, and for that they need to understand the psyche of the people. Risks faced by the social sector and rural

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sector can be broadly classified into liferelated and livelihood-related. Risks related to life would include Life insurance, Personal Accident insurance and Illness/Health insurance. Risks related to livelihood would include Livestock, Agriculture and Property insurances. It would be advisable initially to offer products covering these risks. One major road block insurers face in these types of insurances would be absence of historical and empirical data or if the data exists, unreliable data. This results in higher premium for the customers which would then result in failure of the product. The pricing should be done keeping in mind the buying power of the community and should leverage on the law of large numbers. It would make more sense insuring a large group than a single individual. Further, the viability should be looked on a long term basis of minimum three years instead of making profit in the first year itself. The insurer should instead concentrate on building the data and gain experience in administering such policies. It is always advisable to start on a pilot project basis and then replicate it on a larger scale based on experience. This will give them an advantage to tap the huge untapped rural and social sector market. The terms and conditions of the policy should be simple to understand and with minimum exclusions. Insuring large

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issue focus

Because of the wide geographical disparities and distance from the branches, there could be a time lag between the actual premium collection and receipt of premium at the back office.

numbers would preclude the risk of anti selection and to include more risks like pre existing diseases in case of group health insurances. Marketing and distribution challenges – India is a large country with wide geographical disparity. Reaching the target clients can be a major challenge. Further, community based insurance schemes work largely on trust. Similarly, the premium being very small, the collection and distribution expenses end up being larger than the premium itself. This problem can be mitigated to a large extent by tying up with intermediaries who have considerable presence and influence in target areas. C o o p e r a t i v e s / N G O ’s / M i c r o f i n a n c e institutions can make good distributors of

insurance policies. The insurers can

of insureds is very large, along with

leverage on their strengths and reach; and can also train them to sell their products. They can also help in capacity building of the rural and social sector target

technology, various preventive measures

population. Training of intermediaries and their representatives is critically important as there is always scope for mis-selling. For eg: Critical illness policy may be sold

should be considered.

as normal health policy. Bundling of insurance products with other products can also be explored and will give critical mass and reach.

hygiene, steps to prevent epidemics, availability of doctors for consultation, etc.

Claim Challenges – Geographical outreach poses a major problem for the claims team. The size of claims could be very small. There is also a serious problem of availability of Surveyors/Loss assessors. It is always better to tie-up the claim process before issuance of the policy. The fact that

Underwriting Challenges – In the absence of historical/empirical data, the

most of the insureds will not be able to

underwriters find it very difficult to accept or reject proposals. What loading to be charged or what discounts to allow is a perennial problem facing them. The thumb

exclusions of the policy should be factored

rule would be to go for large groups to avoid anti selection. In the absence of past claims data, similar projects can be taken as reference for pricing. Past

is also explained in simple terms. The

experience of insurance companies who have already ventured into this territory may also be considered. Hence a first hand market experience would be advisable for

losses and do the initial survey/

the underwriters.

person admitted is actually the insured.

The back office processes need to be redrawn. Because of the wide geographical

Similarly, the tag of the dead cattle can

disparities and distance from the branches, there could be a time lag between the actual premium collection and receipt of premium at the back office. Also, since

representative. The insurer’s own staff also

most of the collection would be in cash, there is a danger of fraud. Further, cover notes need to be avoided as there is a danger of back dating after the claim has

efficiency of claims management. Many of

occurred. To decrease cost, cover note cum policies can be issued at point of sale. The date of inception of the policy could be 15 to 30 days from the date of issue of cover

especially in community health policies.

note cum policy, to preclude any possibility of fraud. In case of community health insurances, closed loop of network of hospitals along with pre determined tariffs

community gathering for claim cheque

should be negotiated. Where the number

the claims.

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like health camps, training on good

18

understand the terms/conditions and in the claims process. It is important that along with training of “what is covered and what is not covered”, the claims process infrastructure of the intermediary cooperative/MFI/NGO should be leveraged and their people can be trained to report assessment. For eg: In a community health programme, the representative of the intermediary can go and check whether the

also be checked by the intermediary’s can be trained to survey the losses up to a stipulated amount of say Rs. 20,000/-. This will reduce the TAT and increase the the beneficiaries of micro policies may not have bank accounts. Therefore cashless claim settlement should be preferred, Where large numbers of claims are triggered as in index-based weather insurance, it is advisable to have a distribution. This will increase the trust amongst the community and also prevent any one/group of persons manipulating

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issue focus Improving processes through technology

In case of Rashtriya Swasthya Bima Yojana,

humidity and temperature apart from rain,

– Cost effective technology has come to the help of rural insurers in a big way. Currently there is considerable time lag between the actual collection of premium

government has made it compulsory to issue bio metric cards. The cards contain insured’s data including their name, age, identification number and thumb print. It

which can avoid data inconsistency and errors. Further, “Basis risk” is a matter of concern for the underwriter in weather insurance. Basis risk is the risk of the

and depositing it in the insurer’s office. There can be a claim in the interim period. Mobile technology can provide a solution to this problem. A receipt for the

works like a debit card where the sum insured is credited to the account of the insured. In the event of a claim, the insured swipes the card in the card reader installed

experienced loss being different from calculated loss. To reduce this risk, new generation products envisage shifting from point based weather stations to grid based

transaction can be issued through a PDA at the point of sale. The mobile SIM card installed in the device can then transfer the data to the main server of the insurer

in the hospital and matches his thumb print with the data base. When he is discharged, the claim amount is debited to his account and the balance can be utilized in the next

satellite observations. We can expect to see growth of satellite based Rainfall Estimation (RFE) and Normalized Difference Vegetative Index (NDVI)

instantly. Since there is a time and date stamp in all transactions, chances of fraud too will decrease considerably.

hospitalization.

insurance model in India in the next five years.

Cost effective technology has come to the help of rural insurers in a big way. Currently there is considerable time lag between the actual collection of premium and depositing it in the insurer’s office.

RFID tags for cattle insurance is another significant development in livestock

should not be approached as a legal or statutory requirement, but as a business opportunity. With proper safeguards, this sector can contribute immensely to the top

are actually micro chips, are implanted near the ears of the animal and have a unique identification number. The number is recorded in the policy and can be read

line as well as bottom line. Doing well while doing good is very much possible.

by a RFID reader. At the time of claim, the unique identification number of the chip implanted in the animal can be corroborated with the number recorded in the policy. This reduces the chances of claims being lodged on uninsured animal and subsequent frauds. Currently, the cost of these tags forms about 20% of the average premium and seems to be unviable. But with volumes, the cost is definitely going to be cheaper and very much cost effective. In weather insurance, new automatic weather stations calculate relative

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Finally, rural and social sector insurance

insurance. Currently, tagging is done on the ear of the cattle. This has led to manipulations and frauds leading to a bleeding portfolio. The RFID tags, which

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The author is Asst. Vice President (Rural and Co-operatives), IFFCO-Tokio General Insurance Co. Ltd.

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issue focus

Catalyst for Financial Inclusion INSURANCE

IN THE

RURAL & SOCIAL SECTOR

PRANAV PRASHAD ASSERTS THAT SEVERAL PRODUCTION SYSTEMS OF THE RURAL FOLK HAVE ASSOCIATED RISKS WHICH MAY LEAD TO INCOME AND REVENUE LOSS; AND THESE CAN BE MITIGATED THROUGH INSURANCE LEADING TO STABILIZATION OF INCOME AND REDUCED POVERTY.

I

t has often been said that the heart of India beats in the villages. With 2/3rds of the population living there and the agriculture sector contributing over 20% of the GDP, this sector constitutes a vibrant mass that can effectively be targeted in terms of insurance requirement.

Given the changing ecosystems and improved infrastructure, the need is to look beyond this obligatory requirement and see the rural sector as a commercial, for profit opportunity.

The regulator as a part of its license conditions has stipulated a part of the premia to be sourced from this sector. Given the changing ecosystems and improved infrastructure, the need is to look beyond this obligatory requirement and see the rural sector as a commercial, for profit opportunity. If we look at the requirements of this community, the need for insurance can easily be established, both in terms of livelihood needs as well as household needs. The production systems of agriculture, wage labour, micro-enterprise and animal husbandry all have associated risks which may lead to income and revenue loss which can be mitigated through insurance leading to stabilization of income and reduced poverty. Similarly, on the household side, the risks attached to individuals, families and personal assets can be effectively reduced through insurance products. Insurance in these sectors follows a basic economic logic – it provides people at the lower end of the economic pyramid with a coping mechanism to deal with high stress events, which enables borrowing for investment purposes enabling job creation and wealth in communities. While the challenge of reaching out to communities in the 640,000 villages of the country is immense, there are certain basics that need to be in place so that

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penetration in this segment can be scaled up. Organizations need to develop an independent group focusing on this sector and use technology to manage the low ticket size high volume transactions. In addition, a smaller bundle of innovative products in sync with rural needs and perception and an efficient delivery system, both for acquisition and servicing are the two aspects that have to be looked at critically in order to penetrate the rural markets. This focus has led to the development of innovative products like Index based weather insurance and OPD care in health schemes; technology being used to develop online-offline solutions for giving over- thecounter delivery of policies, use of smart cards both for enrollment and servicing, and in-house administration of claims; use of alternate means of distribution like eenabled kiosks, MFIs & NGOs and effective collaboration with government machinery to spread the message of insurance across the hinterland.

Product development The attempt has been to develop focused products and processes in line with the identified rural risks of health risks, crop failure, personal accident and livestock related risks. Health insurance: The rural economy is dependant on person’s ability for physical

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The opening of eenabled kiosks with instant connectivity enables an insurance quote to be generated and a policy provided on the spot to the customer which builds trust and acceptance.

labour wherein sickness impacts income and indebtedness. The poorest 20% of the population spends more than 12% of their income on healthcare. In these circumstances, health insurance provides a bridge for inclusion of hitherto marginalized sections of society and be a driver in their economic well being. The challenges of offering product to a semi literate customer- who is individually poor but collectively strong, and pricing based on limited actuarial data can be overcome by doing a “need analysis” to understand the risks by working with the target customers and NGOs/MFIs who are operational in the target areas. These institutions can effectively be used in explaining the product as well as subsequent servicing since they have already invested in building up trust amongst the local communities. At this stage it becomes imperative to price on a burning cost basis with investment on

data, demographic profiling and technology solutions like smart cards. Outpatient department centres to provide neighbourhood service would be very helpful in accessing services easily and avoiding hospitalization. This can be done with involvement of local doctors, nursing homes and pharmacists too. Use of smart cards is increasing since they help in the following: Premium Collection / Claims disbursement: Assist in reducing cash management issues / costs. Claims Processing: Authenticate patients using biometrics, validate patient’s insurance details, digitize claims management process and reduce costs. Overall, they can help the underwriter to design better policies and can be a tool for better diagnosis of patients’ records. Weather insurance: In a country where 60% of the agricultural cultivation is still at the mercy of the rains, the development of an index based objective basis for weather insurance has helped in supplementing the efforts in this field. Installation of additional 160 Automated Weather Stations along with those of IMD (Indian Meteorological Dept.) has aided in providing coverage for 17 crops across 9 states. Cattle Insurance: For ensuring meaningful coverage in this segment, the focus is to work closely with lending institutions for risk assessment by alignment of the “lending” and “insurable” criteria. Use of dairy associations and local veterinarians for tagging purposes is also critical along with building in a “cooling time” in risk assumption: for example -coverage starts 15 days after tagging. Diverse Distribution: A robust distribution structure is the key to success in these markets. Direct contact with farmers and communities along with Van campaigns for product explanations are now being complemented with the developing points

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of sales in the rural landscape. The opening of e-enabled kiosks with instant connectivity enables an insurance quote to be generated and a policy provided on the spot to the customer which builds trust and acceptance. The march of the “rural retail malls” with all products under one roof encouraging multi-product purchases enables insurance products to be explained and promoted, since the farmer spends an appreciable time at these stores. Servicing and claims settlement: The crux of the insurance programme lies in how the claim is serviced and settled. Done well, it builds immense trust and goodwill and leads to meaningful sale opportunities in the future. This requires clearly defined transparent servicing parameters and alliances with credible channels so that the existing community relations can be leveraged and frauds can be prevented. Support from banking infrastructure for disbursing low ticket cash based payouts only enhances the local experience. In conclusion, the mantra for success lies in sticking to the basics • Availability of relevant and fairly priced product • Establishment of cost effective distribution • Easy accessibility and quality service. Hence, focused approach along with appropriate regulation is helping build a model that is viable, sustainable and scalable.

The author is Head- Rural & Agriculture Business Group, ICICI Lombard General Insurance Company Ltd.

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Partnering in Sustainable Livelihoods for Rural Youth THE WAY

TO

GO

AVINASH KAUR LOCHAN FEELS THAT ALTHOUGH A BEGINNING HAS BEEN MADE IN IDENTIFYING THE VILLAGES AS CENTRES OF DEVELOPMENT, THE TEMPO HAS TO BE SUSTAINED TO ENSURE AN OVERALL PROGRESS.

The present rural environment

M

any of us who have seen only the urban side of India, would have

perceived the rural villagers as primitive, impoverished, and not a force to be reckoned with. However, this is far from true and there is slow but steady awareness of the new prosperity that is

The seeds sown by the various initiatives of the government are sprouting, and even if it is moving in trickles, the urban prosperity is making a gradual shift to the villages.

taking roots in rural India. India’s villagers now account for the majority of consumer spending in the country, more than $100 billion a year. The wealth distribution is not equitable but many villagers are moving from spending on items of bare minimum necessity to a range so far perceived as luxurious – mobiles, motorcycles, cars, televisions, electronic gadgets etc, to name a few.

have aimed at economic uplift of the people as well as bringing about a greater social transformation. The various policies

Rural India is undergoing rapid transformation and the various markets are awakening to the realisation of the potential that exists in the rural and semiurban areas. The distinctions between urban, semi-urban and rural areas are getting blurred. It is no longer correct to presume that whatever is not urban is rural. However despite such an open market, around 68% of the rural economy still lies untapped due to lack of perceived opportunities by the investors.

The seeds sown by the various initiatives of the government are sprouting, and even if it is moving in trickles, the urban prosperity is making a gradual shift to the

India Shining – Rural Upliftment initiatives • Bharat Nirman • Rural Health Mission • National Rural Employment Guarantee Scheme • National Policy for Farmers Various measures of rural development

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and programs like Rural Health Mission, Bharat Nirman initiatives, National Rural Employment Guarantee Schemes etc are all directed towards elimination of poverty, ignorance, diseases and inequality of opportunities and providing a better and higher quality of life.

villages. The government has invested billions in development, including road building and rural electrification, expansion of irrigation areas, improved water management, housing, telecommunication, research and diversification of economic activities, rural health programs etc. The National Policy for Farmers has been introduced for the overall well being of farmers and rural development than just agricultural production. Various schemes have been announced by the government from time to time for making credit available to farmers as well as waiving overdue and unpaid debts in difficult times. The banks are also being

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Even as India is shining, farmer distress on account of shrinking land holdings, dependence on vagaries of weather and the “gamble of monsoons for good crops” continues.

motivated to extend the facility of “zero balance/ no frills account” to rural India in order to achieve the mission of financial inclusion. It is very heartening to note that some of the leading Public Sector Banks have come forward to adopt select districts and have made them 100% financially inclusive.

Connecting India village to village through the Common Service Centers (CSC) / E-kiosks The CSC Concept comprises of setting up a rural network for delivering services and related information to the village community through an ICT Center called an Information or E-Kiosk which is run by entrepreneurs selected from the villages. This model facilitates the creation of a rural networking infrastructure through a tiered franchise and partnership model for

delivering various information and

holdings, dependence on vagaries of

technology linked services to the rural sector, providing enhanced access to e-Governance, Education, Health, Insurance and local services. These centers

weather and the “gamble of monsoons for good crops” continues. The rural youth forced by adverse circumstances are compelled to look for alternate means of

are owned and operated by local villagers and thus encourage wealth creation, knowledge empowerment, and instantaneous access to information by developing entrepreneurs within the

livelihood; and levels of unemployment continue to rise. Lack of facilities of basic financial inclusion services like availability of banking, credit, insurance etc force many into the clutches of the money-

village community.

Given the fact that there are almost 119

lenders and a life-long doom of bonded slavery. We are all aware that suicides in rural areas on account of distress have been on the rise.

million farmers, agriculture continues to be a way of life for rural India and provides livelihood to 60% of the country’s population while contributing about a

The Poverty Trap – Getting into poverty is ‘easy’, getting out is ‘hard’.

Rural distress

quarter to the country’s Gross Domestic Product. Even as India is shining, farmer distress on account of shrinking land

risks and calamities and when these occur, it may result in poverty, either:

Transient poverty –

Permanent poverty –

Eg cases of sickness/ accident Depending on resources, the rural-poor may or may not come out of it.

happens when shocks result in loss of assets

In case of farmers, for example, the negative shocks can affect their ability to repay financial obligations and lead to a loan default. Lending institutions may then be less inclined to extend loans to this sector in general due to high probability of loan default. The inability to easily access external financing over times limits farmer’s abilities to expand, diversify, and modernize.

provide the rural people with better prospects for economic development,

Lack of awareness and low levels of literacy continue to be the major obstacle in the effective implementation of the major welfare schemes. An organized and well drawn out sustainable strategy of poverty alleviation has to be based on increasing the productive employment opportunities in the process of growth itself. In order to

The Insurance opportunities

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Rural poor are much more vulnerable to

23

increased participation of people in the rural development programs, decentralization of planning, better enforcement of land reforms, greater access to credit and creating opportunities for sustainable livelihoods for the rural youth is very essential.

Sector

and

In the present environment where recession is fast becoming an issue of concern, there is no denying the contributions of the services sector towards the country’s economic growth which had a double digit growth rate of

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issue focus 10.7% in 2007-08. As per IRDA Report for 2007-08, the life insurance industry registered a growth rate of 23.88% and the non-life industry had a growth rate of 11.72%. These have been further supplemented by government initiatives and endeavors by way of subsidised crop insurance products for the farmers of rural India to help the farmers mitigate the risks of dependence on weather, the personal accident insurance covers for the artisans, health insurance facilities for the BPL families and several such similar measures. At such a time, the recently discussed plans of the Ministry of Rural Development along with IL & FS (Infrastructure Leasing and Finance Co Ltd) to explore and support employment opportunities in the insurance sector for the rural BPL (Below Poverty Line) youth to address the issues of poverty within the rural areas of the country is a very welcome initiative.

For all rural oriented schemes it is very essential to ensure that the last mile touch point is closer to the customer.

Current challenges before existing distribution channels for rural distribution • High costs of rural distribution on account of travelling, creating awareness/educating and motivating rural customers to buy insurance • Building faith about the company in the mind of the rural public • For all rural oriented schemes it is very essential to ensure that the last mile touch point is closer to the customer. At present the customers are not very knowledgeable about the different products offered, and in some cases are not even aware of the government support available by way of subsidy in premium to protect their lives/health/ crops from insurable risks.

Creation of agency talent pool to provide sustainable livelihoods for rural youth and off-farm employments If all the 43 (22 life and 21 general) insurance companies and the willing banks can come together, pool in their resources and share their wisdom based on experience and market practices; a workable model of a “Single-Window Financial Services Representative” with certain modified parameters, if so permitted by IRDA can be successfully implemented across the country. These can become the grassroots life lines of insurance/financial inclusion services and serve as the link between insurance/ banking companies seeking connectivity to that last mile to rural India.

case of a composite agent who sells both life insurance and general insurance products, he is required to undergo 75 hours of training and then clear the exam conducted by the Insurance Institute of India for obtaining a valid license.

Post license Training This “Single-Window Financial Services Representative” may be trained and subsequently equipped to provide a basket of services so that they are ensured a regular level of income the year round. The training would require to focus on the following aspects: Soft skills training would aim at making the rural youth aware of his own knowledge-gaps and empower him to take self-improvement actions for the same like communication, sales and marketing skills etc. Business process training to upgrade the rural youth’s existing level of knowledge or skill to match with the job profile and this may be done through induction programs, on-the-job trainings etc. on the following lines: • May be provided assistance to set up and manage E-kiosks to provide financial services in terms of reduced costs and increased incomes and the benefit of access to education, computer literacy and information • Assistance in opening zero-balance bank accounts for the rural public not having access to financial services • Marketing post-office schemes

Complying with basic qualification and training

• Selling life insurance policies

The IRDA has stipulated a minimum education qualification for every insurance agent which may be 10th pass in a rural area and 12th pass if he has to do business in an urban area. The agent has to undergo at least 50 hours of training to become a

• During season – selling the seasonal crop insurance policies and at other times

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life or non-life insurance agent and in the

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• Selling general insurance policies

providing basic minimum education on good agricultural practices to the farmers in their area. This suggestion is based on experience and the confidence

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issue focus - Collection and remittance of premium to insurers, policy administration services, policy document servicing to customers - Assistance in claim settlement - Maintenance of required registers and records

It was very heartening to note that in order to create and sustain livelihoods for the rural BPL Youth, several insurers were willing to share their resources by way of providing training material, or faculty or even sharing training centers where possible.

- Learning the importance of economies of scale through wholesale distribution by engaging with groups for cost effective collaborative arrangements like with Banks, RRBs, contract farming groups, NGOs/MFI/SHG for rural distribution It was very heartening to note that in order to create and sustain livelihoods for the rural BPL Youth, several insurers were willing to share their resources by way of providing training material, or faculty or even sharing training centers where possible.

Suggested remuneration • A fixed stipend in the range of Rs 500/per month in addition to • Commission which may range from 15% to 25% for various products

would be a win-win situation for all stake holders: • Sustainable livelihoods for the rural BPL youth so that they are no longer subjected to life long poverty • Decrease in distribution costs coupled with an educated and trained agency force for the insurance sector to work at grassroots level as the most efficient delivery channel to reach out to the rural markets • Comparatively lower levels of attrition of the agency force if the trained youth work in their own native areas where they enjoy the confidence of the local community • Contributing towards financial inclusion at grassroots level • Assisting the insurance sector to achieve its Rural and Social Sector obligations successfully • Being Socially Responsible Corporate entities providing employment opportunities and contributing in nationwide poverty reduction • Reaching and serving the un-served areas and achieving quantum jump in insurance penetration levels.

Conclusion Creating a mutually beneficial situation We are all aware of the obstructive shortage of trained insurance agents and the fact that even after 9 years of opening that several seed/fertilizer/pesticide companies would come forward in this initiative without incurring much additional cost. • Insurance policy servicing aspects like - Filling up of proposal forms and compliance with related documents

up of the insurance sector the insurance penetration levels are as low as: Life Insurance Sector

4%

Non-life Sector

0.6%

Crop Insurance

About 15%

Successful implementation of this model

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The author is Manager, Agriculture Insurance Company Ltd.

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follow through

Championing and Institutionalizing INSURER’S TCF CHARTER SRINIVASAN VARADHARAJAN AND SHRINIVAS SUSARLA OPINE THAT TCF, AS A CORPORATE STRATEGY SHOULD BE FORMULATED BY THE TOP MANAGEMENT; AND SHOULD PERCOLATE TO THE LOWEST LEVELS OF WORK FORCE.

Introduction

T

reating Customers Fairly (TCF) is a culture of considering the customer at every stage of running the business and ensuring that any action within or on behalf of the company does not result in any unfairness for the customer. In recognition of the imbalance of knowledge and power between an organization and an individual, governments and regulators across the globe have strived to ensure a fair deal for the customers. Till the recent past, maybe a decade ago, such measures were administered through laws, rules and

A principle based regulation regime whose conditions and required outcomes when met, stoke a customer centric fervor that is seen to be better than a rules based regulation regime.

regulations which stipulated how organizations should interact with the customers. However, it has come to be recognized that an innate desire within an organization to be fair to the customer achieves much more than any rules imposed on the organization from outside. Hence a principle based regulation regime whose conditions and required outcomes when met, stoke a customer centric fervor that is seen to be better than a rules based regulation regime.

Customer Centricity in India In India, customer centricity has been prevalent for a long time. Many of the compliance requirements by the Government even during the preliberalization era were there to ensure that the customer got a fair deal. In a business, there are two levels of interaction with the customer. One is organization to customer (O2C) interaction and the other is industry to customer (I2C) interaction. By I2C, the authors refer to the way an industry as a whole perceives the market. This includes pricing the products, determining the production levels and the manner in which a particular product is sold. The interaction an industry

as a whole has with the customers is much more regulated than the former. In India, previously the MRTP commission and now Competition Commission of India are vested with the responsibility of monitoring for any cartelization activity. There are ombudsmen for various service sectors that have been empowered to act on complaints from individual consumers. For insurance, IRDA lists the ombudsmen for the various regions. They are to handle any grievances against the insurer, provided they have been raised with the insurer before and not settled to the satisfaction of the customer. TCF as a self-governance mechanism based on agreed philosophy is not new. In fact, the Government of India has mandated citizen charters for long. The GOI through Department of Administrative Reforms & Public Grievances, Ministry of Personnel has stated the objective of such a charter and the road map for any government organization to establish such charters1. The Government of India has given utmost importance for customer satisfaction through such efforts. However the citizen charters are not legally enforceable and are self-affirmations towards better service to the customer.

1. http://goicharters.nic.in/faq.htm

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follow through

The FSA also conducts telephonic enquiries as well as seeks correspondence on TCF initiatives. As it can be seen, these outcomes, resultant of TCF, are a good reference model. Customer Centricity in Financial Serv ices – International Experience United States In the United States, Insurance Marketplace Standards Association is a nonprofit, voluntary and independent organization created to strengthen consumer trust and confidence in the marketplace for individually sold life insurance, long-term care insurance and annuities. IMSA-qualified companies commit to maintaining high ethical standards and to being fair, honest, and open in the way they advertise, sell and service their products2. Also, the federal body National Association of Insurance Commissioners (NAIC) has a set of model laws on unfair trade practices for state insurance agencies to adopt3. But these laws (when adopted) are rules based and mandated rather than principles based and self-imposed.

Japan In Japan, the regulator “The Financial Services Agency, Japan” has also come up with principles based regulation called, “The Principles in the Financial Services” which should govern all the activities of financial services firms. On April 18, 2008,

the Financial Services Agency (FSA) and the representatives of the financial services industry agreed on the key principles to be shared and respected when financial firms conduct their business or when the FSA take supervisory actions4. As a “better regulation’’ initiative, the FSA, Japan presented the concept of “optimal combination of rules-based and principlesbased supervisory approaches,’’ and held extensive discussions with representatives of relevant financial firms on key “Principles”, which would become the cornerstones of principles-based supervision. A “principles-based’’ approach is a supervisory framework that, in line with the Principles, places greater emphasis on encouraging voluntary efforts by financial firms aimed at ensuring better management. The principles enunciated by FSA, Japan are provided in the their website. The FSA, Japan goes on to detail the effects the principles have on the various stakeholders.

United Kingdom In UK, the financial services regulator Financial Services Authority (FSA), has produced several discussion papers and also monitors TCF initiative levels among various financial services organizations. The FSA, UK is one of the pioneers in opening the deliberations on TCF. As a part of the TCF movement, The FSA defines its expectations on TCF through outcomes. The FSA also has a large body of work on TCF, its applicability to financial service organizations of various sizes, the way to go about implementing the TCF and indicators to the presence or absence of TCF in an organization. By way of monitoring the TCF philosophy implementation levels in organization, the FSA has regional assessment centers where individual firms are invited. The FSA also conducts onsite examinations at the organization’s locations. The FSA also conducts telephonic enquiries as well as seeks correspondence on TCF initiatives.

As it can be seen, these outcomes, resultant of TCF, are a good reference model.

The need for TCF Nowadays, it is recognized that selfgovernance is the best governance and hence principle based regulation (PBR) is more in vogue. Under a PBR regime the governing philosophy is usually stated and the market place entities have to commit to it. But the exact nature of implementation of the committed principles is left to the individual business entity. Treating Customers Fairly (TCF) is one such principle based approach. TCF is about transparent governance. TCF is a structured way of institutionalizing customer centricity in an organization. In the past when information asymmetry came to be acknowledged as a hurdle insurmountable by the customer, regulations came to be drawn up for ensuring that the customer is not cheated in any transaction. Examples of such regulations are requiring that weight/ quantity of commodity be printed on the package, maximum retail price be printed, letting the customer know that insurance is the subject matter of solicitation etc. Such regulations are still there and do prevail. But it is possible to observe such regulations in letter and not in spirit. An example of such a possibility is where legally required verbiage is given in a small print in an advertisement.

Customer Centricity in Indian Insurance Industry With regard to Indian insurance market, the regulator IRDA already mandates several activities which protect the customer interests. Insurance Advertisement and Disclosure regulations and IRDA (Protection of Policyholders’ Interests) Regulations, 2002 are two examples of such development oriented regulations.

2. http://www.imsaethics.org/ 3. http://www.naic.org/documents/store_pub_legal_models_tblcont.pdf 4. http://www.fsa.go.jp/en/newsletter/2008/05a.html#ft01

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follow through The cooling-off period, where the customer, after purchase of a policy can return it within 15 days for a refund of money paid is an example of a regulator mandated process. Another example is where the insurer must provide an illustration of benefits. Thus even though such initiatives are not clubbed under a single TCF umbrella, the government and the regulator have put in appropriate safe-guards in place to ensure no mis-selling happens for the customer. Insurance providers selling an intangible product, have all the more reason to adopt TCF initiatives.

‘C’ Model for Institutionalizing TCF The principles central to TCF philosophy can be succinctly put down as below: • Confidence – Creating an atmosphere of trust • Clarity – Transparency in sales and service • Communication – Effective and proactive communication; Agreed expectation • Comfort – Simplicity in business interactions The TCF delivering mechanism for treating potential and existing customers fairly by insurance companies are as follows: Co

Co

mf

n fi

den

ce

ort

TCF

Co

mm

un

y

it ar Cl

ica tio n

• TCF should be imbibed into the organization culture. • TCF initiative should have senior management commitment.

• Senior management commitment on TCF should fully percolate down to the lower rungs of the organization hierarchy, particularly the customer interfacing personnel. • TCF metrics should be collected at regular intervals and reviewed by the senior management. • All the employees must undergo training on TCF and should be made aware of the need for their actions to be based on TCF philosophy. Listed below are a few indicative actions that would follow. Some of them are already being practiced. However, TCF as already mentioned is about integrating such efforts to deliver an organized approach towards customer centricity. • The insurance company must project a customer friendly message to the market. Any interaction with the company that the customer has must be quick, friendly and reasonable. Even if the company cannot resolve every demand of the customer to the customer’s satisfaction, it must strive to address them, and all of them. • All the advertising material must make clear its target audience and the features must truly address the intended segment. For example: a product specified as a children’s plan must have unique features that cater to the child market segment. • Customers should be provided with detailed illustration of benefits. Post sale, the customer should be provided with the proposal form, detailed explanation of benefits purchased and the free look period available to them. Providing a statement giving the net return on premiums paid in a standard format could also result in a lucid picture to the customers. • When the agent helps the customer in selecting a particular product, care must be taken that the product is suitable to the customer. For that it would be better if the agents followed a checklist ensuring that the customer’s personal financial details and commitments are

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all ascertained before a particular product is prescribed. • Customers must be advised of the ways to approach the insurance company and the method by which they can deal with their policies. Commitments on service standards by the insurer for the various customer enquiries and service requests should be communicated and publicized to the customer.

TCF Implementation Roadmap We suggest the following roadmap be considered for TCF implementation in an organization. This roadmap is loosely based on the roadmap recommended for Citizens’ Charter implementation by the Department of Administrative Reforms and Public Grievances. • Setting up of a Task Force in the Organization to formulate the company specific TCF principles broadly aligned towards industry standards and adhering to regulator recommendations. • Identification of all stakeholders in the Organization and major services provided by Organization; • Setting up of a core group in the organization consisting of representatives from all stakeholders which interalia may include senior management, middle management, customer facing roles, business area owners, strategic partners, customers/ clients etc. The core group shall oversee the formulation of the TCF principles and approve it. It shall monitor its implementation thereafter. • Consultation with stakeholders and their representative associations. • Preparation of Draft TCF principles. • Issuing the Draft TCF principles for stakeholder suggestions. • Incorporating the feasible suggestions received into the draft. • Submission of draft Principles to the industry regulator. • Modification of TCF principles by the core group on the basis of suggestions/ observations by the regulators. • Submission to the organization board for approval.

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follow through • Formal issue/ release of TCF principles. • Communicating the formalized TCF principles to all the stakeholders including the customers. • Appointment of a CCO to ensure effective implementation. A transparent process which takes every stakeholder into confidence is essential for the successful implementation of TCF in an organization.

Championing TCF: Customer Officer

Chief

The Insurance Company should establish a corporate level Chief Customer Officer (CCO) along the lines of Appointed Actuary. • The CCO should drive the implementation of TCF across all levels of the organization. This will ensure uniform levels of implementation. • Any material change in the company’s processes should have the approval and sign-off of the CCO. This will ensure that the company’s adherence to TCF stays firm through the various and inevitable organizational changes. • The CCO’s performance should be measured against service standards set and achieved and also through an external review say, by the regulator. • The CCO should also periodically present to the Board on the status and progress of TCF initiatives.

• An annual report on TCF adherence should be communicated to the customer and proactively shared with the regulator. • A company board member could be a CCO. This will be a visible display of company’s commitment in putting customers to the fore in all decisions. • Metrics on TCF should be defined by the CCO. They can come out of customer complaint statistics, distributor survey responses, persistency benchmarked against industry levels, Any ombudsman report, public perception measured using public surveys, press coverage etc. • The CCO should vet all the customer interfaces like Advisor web-site, customer portal, customer communications etc for adherence to the TCF principles.

The concepts of TCF and CCO should not be limited to insurance companies. Their applicability should be extended to the various organizations that enable the insurance products reach the customers. It would be apt to have a course on TCF principles in the training module for advisors.

References 1.Citizens Charters in Government of India, Department of Administrative Reforms and Public Grievances, Ministry of Personnel, Government of India. http:/ /www.goicharters.nic.in/

Summary

2.Insurance Marketplace Standards Association. http://www.imsaethics.org/

We give below an indication of the role span for the proposed CCO. As it can be seen the role of the CCO extends much beyond the current compliance and grievance redressal offices. In fact they are a sub-set of TCF activities. While any grievance redressal is a reactive measure,

SALES

POST-SALES

Understanding customer

Unambiguous marketing

Grievance Redressal

Product design for customer needs

Product suitability

Complaint metrics

Right marketing segmentation

Transparent sale process

Smooth Service interactions

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To execute the responsibilities that the CCO role brings with it, a level of authority is also required. The level of commitment a company has towards TCF is a factor in the authority that is provided to the CCO. Hence this is a company dependent strategic decision.

• The CCO will conduct random check on policy purchases to ensure the sale has been conducted suitably. Similarly the CCO will also examine randomly service transactions to monitor TCF adherence

Role span of CCO

PRE-SALES

TCF also involves pre-emptive measures to ensure that concern for customer is at the heart of all business activities.

29

3.Financial Services Agency, The Japanese Government. http://www.fsa.go.jp/en/ 4.Financial Services Authority, United Kingdom. http://www.fsa.gov.uk/

Acknowledgements The authors would like to thank Krishna Sathyanarayanan, Principal Consultant, Insurance Domain Competency Group, Wipro Technologies, Bangalore; Vikas Chandak, Sr Manager, On Line Marketing, ING Life Insurance, Bangalore; and, N.V.Subramanyan, Manager, Business Analysis, HSBC Global Technology Center, Pune for their review inputs.

Srinivasan Varadharajan is a Domain Consultant, Insurance Domain Group, Wipro Technologies; and Shrinivas Sathya Susarla is Deputy General Manager (IT), ING Life Insurance. The opinions expressed and conclusions reached by the authors are their own and do not represent any official position or opinion of ING Life Insurance or Wipro Technologies.

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follow through

Customer Relationship YOUR MOST IMPORTANT ASSET

RAJESH SUD EMPHASIZES THAT THE RELATIONSHIP THAT IS BUILT WITH CUSTOMERS AT ALL TIMES COMES IN HANDY, ESPECIALLY WHEN THE GOING IS NOT SO GOOD.

A

ll too often, financial services companies view building customer relationships as additional cost and take long-term investment decisions about people and processes of customer management based on short-term returns alone. Such investments are clubbed as a part of either marketing cost or operations cost and sometimes even as technology cost. In good times, the impact of such

Quality of customer relationship is often the differentiator, more true for life insurance because we are in the business of quality of life.

shortsightedness is not evident as customers are available in large numbers. In bad times, the limits of this myopic strategy become all too painfully evident. A relationship needs nurturing and consequently a genuine passion for a fruitful interaction at all times. In the current market downturn with a negative consumer sentiment, service providers may find it a challenge to retain customers if they have not invested in relationship building till now. Strong relationships drive loyalty and loyal customers are the best source for new customers in today’s time both through referrals and word of mouth. Quality of customer relationship is often the differentiator, more true for life insurance because we are in the business of quality of life. An organisation’s ability to expand business in normal times is helped by the overall economic climate. But it depends more, at other times, on its ability to win customers ahead of competition. And winning customers clearly depends on the value proposition of the relationship it promises, and the proposition that it actually delivers to its existing customers. Insurance companies, along with others in the financial services business, face a greater challenge than their non-financial counterparts in the current market situation. The reputation of financial service providers has never before been

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viewed as sceptically as it is today. The questions being asked from the life insurance advisors/ sellers about their credentials and products are stronger than ever before. Hence, insurers need to build their reputations by focussing on customer care as a strategic asset.

Building a relationship The traditional view of customer relationship was that it began after the sale – providing after-sales services. Then came the approach that customer relations began at the point of sale, by ensuring that care must be taken to ensure that a product or service is delivered to the customer on time and on the terms promised and the after-sales service was a given. The approach where all the business decisions are taken keeping customer as the focal point is at the nerve center of a truly customer focused organization. Today we know that the relationship with the customer begins much before the sale itself. It starts from training the distributors and employees to focus on customer’s needs. It starts with setting in place a structure that will ensure proper sale and after-sale services. It starts with ensuring that prospective customers receive all relevant information about products and policies in a simple, transparent manner.

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follow through

Training is the key not only for distributors; it is probably more crucial for employees. Trust in a company is very often determined by the conduct and reputation of its employees.

In the life insurance sector, though this may be well understood, it is seldom practised. Proper need analysis prior to product proposition needs to be done to inculcate a “solution selling” culture within the field force rather than a “product selling” culture. The former will ensure that there is a relationship dialogue with the customers that starts well before a sales is actually made. It is a well-known fact that winning over a new customer is much more expensive than going further with an existing customer, either in terms of renewals or selling new series of products. A survey in the USA actually put the cost of getting a new customer at five times the expense of following up with an existing customer! Customer relationship begins with training agents and building the appropriate customer expectations

Life insurers have increasingly recognised that it is important to begin by a sensitive and a realistic understanding of a customer’s – or potential customer’s – needs for protection or long-term wealth creation. I use the words ‘sensitive’ and ‘realistic’ after some careful thought. The agent advisor must be sensitive to the risk the potential customer may face, and assess the value that can be assigned to that risk. Then comes the difficult part – convincing the client of the risk, of the value that can realistically be attached to that risk; and making a compelling case for the need to pay for the mitigation of that risk. Clients may want more or be satisfied with less; a sensitive and informed advisor will know how to arrive at the appropriate balance. Thus, more than any other activity, the relationship with the customer is focused on ensuring that he or she gets the appropriate insurance policy and at the right cost. The strategic investment from the life insurer in this exercise is the quality of training imparted to the agent advisor. Insurers should realize that it is not enough to provide initial training. Ongoing training and evaluations of agent advisors should be a priority and insurers should consistently invest in building a strong in house training capability. Training is the key not only for agent advisors; it is perhaps more crucial for employees. Employees exercise a critical influence on distributors and customers; their behaviours send powerful signals to the outside world. Trust in a company is very often determined by the conduct of its employees. With insurers, employee behaviour could particularly influence agent advisors, who, in turn, would guide customers. Life insurers should consistently engage in continuous employee training and should aim at being widely known in the industry for imparting life insurance knowledge. To

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derive business benefits out of this investment, a yearly employee engagement study should be conducted across all functions and surveys should be put in place to ensure that the highest benefits are derived. We must remember that agent advisors and distributors are as much the customers of insurance companies as are the policyholders. Strategic customer relations would involve training employees to be accessible and responsive to agent advisors and distributors, setting up structures for such openness and for this to be timely and easy. At the same time, regular process audits are required to ensure responsible behaviour.

The value of feedback Accessibility is a key component of the relationship, whether with the policyholder or the distributor. It is not just about physical availability but about openness to the opinions and comments of customers and agent advisors and by the establishment of listening post for such stakeholders. What is also important here is that a favourable early customer experience is critical for building a strong relationship, quickly. At the initial stage, the customer is more evaluative about the relationship and a positive experience goes a long way in paving the way to build a sustainable long-term positive relationship. Employees must be sensitised to the value of feedback. Even complaints must be viewed positively as feedback and then converted to opportunities, rather than looked upon merely as grievances! A customer-focused culture encourages employees to facilitate the expression of complaints! To encourage employees to do so, the company needs to have a sensitive human resource management programme in place, which goes beyond training programmes to insightful management of all interpersonal relationships within an organisation. Accessibility and openness also determine

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follow through effective product design as the feedback

Customer management expertise results in

in the listening posts can be used to design

improved ways of conducting business. For

products that meet customer needs even

a start, it allows more precise listing of

more effectively. The critical exercise of

the likely questions from prospective

developing a range of suitable products is

customers as well as explicit detailing of

about being aware of customer needs. The insurer’s range of products must meet the varied needs of the vast variety of people’s circumstances and life stage needs. And without listening to its customers, studying their needs, such a range of products meeting the spectrum of client needs cannot be designed.

Research prepares for a relationship with the customer Financial services companies must have appropriate investments to understand their customers better as they develop

the possible responses. It makes for

Understanding and knowledge gathered through research not only helps design products and various support systems, it also helps improve the quality of advice to clients.

efficient response systems to customer claims, queries and complaints. Equally, it

responds

with

efficiency

and

transparency to questions from the agent advisor and distributor.

Conclusion Customer relationship is centred in partnership Ultimately, effective customer relationship is centred in partnership, focused on the fact that all players – whether customer

customer

as policyholder or distributor, employee or

relationships. This is not just about buying

management, shareholders or promoters

a CRM solution or sending mailers to them

¾ are partners in the success of the service

on birthdays. A genuine effort must be

that

made to understand, segment and reach

understanding that a life insurance

deeper

and

beneficial

the

company

provides. The

out to customers in the way that they want

not only for the long term — but also for

business is essentially one of partnership

to be communicated. Efforts should be in

the various milestones and possible

in helping customers meet their life’s

place to conduct periodic research to

eventualities through their lives.

opportunities and adversities will go a long way in aligning the functional arms in a

understand the expressed and latent needs

life insurance business. If proper attention

customer data is stored and updated at

Customer relationship is about a mindset and a way of conducting business

regular intervals. Academic research and

Customer service is not just providing

principal in a downturn since relationships

periodic market surveys also enhance

superior customer service in terms of

were never strong to start with. And when

customer segment understanding.

complaint resolution; customer service

the upturn comes, the company may find

starts with the mindset that the client

itself without much of a ‘partnership’ and

should not have a problem at all.

not be able to enjoy the consequent upside

of potential and existing customers; and build a data warehouse where key

Research helps both in understanding customer needs as well as in identifying

customer may start distrusting the

that the ones who are successful in their

the effective distribution channels by

Such an approach inspired Toyota, to

establishing what information the potential

pioneer the hybrid car, using battery

client seeks, the services required after

charges to balance over-dependence on

the sale and the ambiguities and fears

the ever dearer and increasingly scarce

about brands and products.

Such

fossil fuels. It influenced telecom service

understanding and knowledge helps in

providers to opt for sharing tower

designing products, information packs, the

infrastructures to reduce costs and lower

agreement documentation, the training

user charges. And it persuaded shampoo

modules for agent advisors and various

manufacturers into introducing the sachets

other support processes. It helps to

to meet the needs of customers with

improve the quality of advice to clients –

limited means.

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to this is not given at all times, the

32

customer management practices may do.

The author is CEO and Managing Director, Max NewYork Life Insurance Co. Ltd.

Apr 2009

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research paper

Pilot Study on Morbidity Rates INTERESTING OBSERVATIONS

TO THE

FORE

G. N. BHASKAR RAU OBSERVES THAT HOSPITAL ADMISSIONS ARE NOT GENDER-BASED; AND FURTHER THAT THERE IS A TENDENCY IN THE LOWER STRATA OF THE POPULATION NOT TO SEEK HOSPITAL ADMISSION AT HIGHER AGES.

(Continued from Feb.09 issue)

‘Deaths’ seem to follow the natural trend of lower percentages of ‘deaths’ in the lower ages, on treatment on hospitalization, and gradually increases as age increases. Even here the ‘child mortality’ for the age group 0 - 4 is as high as at the age group of 50 – 54. It is again interesting to note that the two urban hospitals (the Gandhi Hospital at Secunderabad and the Osmania Hospital at Hyderabad) behaved almost similarly in their “Outcome” outputs. Even the suburban hospitals at Warangal, Visakhapatnam and Kurnool were producing ‘patterns’ similar within the groups of each year and also for the two combined years. And, it is also observed that urban locations experience higher ratios. This indicates that there seems to be certain regional patterns emerging in the ‘outcome’ distributions peculiar to the regions. This aspect needs some more analysis especially in relation to either ‘duration’ of morbidity and / or ‘specialty’ distributions, before making any final comments. It may be possibly expected for the ‘locations’ to also have certain different patters, on the divide of urban and non-urban factors, in that the morbidity may differ in the ‘specialty’ groupings, like, cardio-vascular’ diseases,

‘renal’ complaints, ‘digestive’ disorders etc.

Gender Divide in ‘Outcomes’ One of the aims of the study is to trace the ‘Outcomes’ of hospital admissions gender-wise and to find whether gender has any effect on the outcomes. This study has categorized the outcomes

There seems to be certain regional patterns emerging in the ‘outcome’ distributions peculiar to the regions. This aspect needs some more analysis especially in relation to either ‘duration’ of morbidity and / or ‘specialty’ distributions, before making any final comments.

This study treated the entire data vis-àvis the first two categories of outcomes, namely, relieved and died, across the gender differences of morbidity rates. This study used these two parameters to measure the gender divide in the outcomes of the sample morbidity rates, namely, ‘duration’ of hospitalization before the occurrence of the said two outcomes of relief and death; and the ‘percentage’ of hospital admissions which underwent the said two outcomes of relief and death, across males and females.

Outcome Durations Duration of hospitalization was calculated,

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under three heads, as ‘Relieved (Cured)’, ‘Died’ and ‘Left Against Medical Advice (LAMA)’. These ‘outcomes’ are the status of the morbid persons, who were admitted into the hospitals for treatment, at the time of their ‘discharge’ from the hospitals. Some were discharged with positive outcomes as ‘relieved’ of their morbid state or cured, while some were discharged with negative outcomes as ‘died’ and some leave the hospital against medical advice or abscond without information. Naturally, the actual outcomes of the last category of morbid persons will not be known for medical purposes.

33

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researcj paper in days. It may be noted that the morbidity condition in the person might have been in existence even before the Date of Admission of the person into the hospital, while this study reckons the morbidity in the person only from the Date of Admission to the Date of Discharge. In many cases the previous history of the disease or the onset of the morbidity condition in the person was not available, for certain, and hence only the recorded dates were considered here in this study, to arrive at the duration static. The limitation on which this study is based is described at length, elsewhere, under the caption of ‘Definition’ and ‘Limitation by Definition’. (vide page 4: relevant comments reproduced in the footnote under) 7

results of average durations (the average durations above are higher or almost equal average durations): • Females seem to take same or slightly longer average durations to get ‘relieved’ than males • Females seem to take same or slightly longer average durations to ‘die’ as men take during hospitalization and treatment • At greater part of the age groups (from age 0 to age 49) females take longer average durations to get ‘relieved’ than men, which also seems to be the normally and universally observed feature. This may be because of the physiologically developing age bracket

in females like vulnerable infant age, puberty, child bearing and menopause ages involved, requiring females to ‘resist’ morbidity in longer durations. • Whereas there are no such marked age brackets in which females experience average duration differences, though the same age groupings of their physiological manifestations (0 – 5; 15 – 19; 25 – 29; 35 – 39; 45 – 49) take place females experience higher average durations (for ‘death’) than males. These average durations of the male – female divide were further analysed to compare the ‘average of the average durations’, ‘Standard Deviation’, ‘Minimum Average Duration’, and

Duration-wise Analysis The duration for each individual morbid person in the entire morbidity sample was calculated, for each selected regional hospital (namely Gandhi Hospital, Secunderabad; Osmania Hospital, Hyderabad; MGM Hospital, Warangal; KG Hospital, Visakhapatnam and Government Hospital, Kurnool) separately, and then the average duration for each quinquennial age group was arrived at, for each regional hospital. These average durations were then tabulated across male-female divide and also for each category of outcome, mainly for the two definite outcomes of ‘Relieved’ and ‘Died’. The third category of outcome – LAMA – is omitted, from the study, for obvious reasons, that it is not a definitive outcome and its final and factual outcome being not known and may result as a distant event which is not relevant to the present study. The entire combined data of all hospitals was also treated similarly and the results are given in the table that follows. The analysis below shows some important

YEAR 2005: COMBINED DATA : AVERAGE DURATIONS Age

All Males Number

All Males Relieved

AV. Dur Died

All Females Number

All Females Relieved

AV. Dur Died

0-4

317

6.32

2.87

265

10.71

(5 - 9)

198

9.80

4.55

156

14.12

5.52 1.68

(10 - 14)

234

11.19

6.37

182

8.63

2.09

15 - 19

308

9.64

3.42

278

10.23

5.05

20 - 24

469

10.00

5.46

284

9.90

5.01

25 - 29

434

12.04

5.12

270

11.85

9.82

30 - 34

377

13.45

3.95

221

10.47

3.41

35 - 39

403

10.89

4.57

213

13.81

8.58

40 - 44

401

9.13

8.31

195

9.90

4.93

45 - 49

363

10.41

5.03

194

13.65

8.37

50 - 54

412

10.94

8.87

213

9.91

4.77

55 - 59

271

9.18

3.85

110

11.85

5.02

60 - 64

363

9.67

6.81

169

11.03

7.62

65 - 69

200

7.92

3.13

87

9.58

2.34

70 - 74

186

8.89

3.59

81

5.14

6.96

75 - 79

71

8.44

5.01

40

5.65

5.67

80 - 84

35

5.21

5.70

24

5.52

5.65

85 - 89

14

8.33

3.10

9

6.00

3.30

AVG:

9.53

4.98

9.89

5.32

STDEV:

2.25

1.79

2.73

2.23

MIN:

3.12

2.87

5.14

1.68

MAX:

13.45

8.87

14.12

9.82

TABLE 1

7.

“This is the background against which this study is set with ‘morbidity’ defined as a condition of morbidity which is (medically) ‘treated’.” The above limitation of the study may be acceptably ignored in view of the fact that most of the studies world over is based on similar data-base.

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research paper YEAR 2005: COMBINED DATA : AVERAGE DURATIONS

‘Maximum Average Duration’. These statistics are studied for both the outcomes of ‘Relieved’ and ‘Died’, and tabulated (Table 2): Interestingly, all the statistics, namely, the averages of average duration, the Minimum Durations and the Maximum Durations, also confirm that females take longer durations to undergo both the outcomes ‘Relieved’ and ‘Died’ , except in the case of Minimum Duration, where the duration is more (for Females than Males) in case of ‘Relief’ than in the case of ‘Death’.

ALL MALES RELIEVED

AV. DUR DIED

ALL FEMALES RELIEVED

AV. DUR DIED

AVG:

9.53

4.98

9.89

5.32

STDEV:

2.25

1.79

2.73

2.33

MIN:

3.12

2.87

5.14

1.68

MAX:

13.45

8.87

14.12

9.82

TABLE 2 ALL MALES / FEMALES: AVG. DUR: RELIEVED

Therefore, the general inference that may be drawn from the above analysis seems to be that females tend to have equal or higher probability than males in ‘maneuvering’ morbidity. The probability of males getting discharged premature, to get back to work and earn early, is not indicated in this study, because all such early voluntary discharges are labeled under LAMA (Left Against Medical Advice).

Modal Age, Mean Age and Median Age: Average Durations

MALES 20 - 24

10.00

MEAN AGE OF SAMPLE DATA

35 - 39

10.89

13.81

MEDIAN AGE OF SAMPLE DATA

30 - 34

13.45

10.47

ALL AGES AVG OF SAMPLE DATA

AVG:

9.53

10.26

DIED MALES 20 - 24

5.46

5.01

MEAN AGE OF SAMPLE DATA

35 - 39

4.57

8.58

MEDIAN AGE OF SAMPLE DATA

30 - 34

3.95

3.41

ALL AGES AVG OF SAMPLE DATA

AVG:

5.09

5.32

TABLE 3

Similarly, even the “average of the average durations for all the age groups” in respect of the two outcomes of ‘Relief’ and ‘Death’ for both ‘males’ and ‘females’ seem to be more or less the same (9.53 & 10.26 and 5.09 & 5.32 respectively).

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Jan 2009

FEMALES

MODAL AGE OF SAMPLE DATA

It is interesting to note that the analysis shows that the average durations for both ‘males’ and ‘females’ at the modal age (20 – 24) are more or less the same for both the outcomes of ‘Relief’ (10.00 & 9.90 respectively) and ‘Death’ (5.46 & 5.01respectively).

19

9.90

ALL MALES / FEMALES: AVG. DUR:

The Table 3 shows the average durations of the two outcomes of “Relief” and “Death” observed at the modal, mean and median ages of the sample morbidity data. The same results are plotted on a graph (Graph 1) to get a clearer meaning of the results:

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FEMALES

MODAL AGE OF SAMPLE DATA

GRAPH 1

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researcj paper Another notable feature that emerged out of the analysis is that the average durations of both the outcomes of ‘Relief’ and ‘Death’ for both ‘males’ and ‘females’ at the modal age and as average of average durations for the entire age groups are also in more or less close range of values, namely, 10.00 & 9.90, 9.53 & 10.26, and 5.46 & 5.01, 5.09 & 5.32 respectively. Modal age being the age bracket where the maximum number of the data lies and the average duration of the average durations being in relation with the entire data over all age groups (0 to 89), we may conclude that the average duration taken by both ‘males’ and ‘females’ for getting ‘Relieved’ from morbid state after hospitalization is around 10 days and the average duration for the negative outcome – ‘Death’ – to result during hospitalization is around 5 days. This inference may be useful for insurance purposes subject of course to some more deeper analysis of certain other relevant data.

Crude Morbidity Rates and Curves One of the major objectives of this study is to draw ‘Crude Morbidity Rates’ (CMoR) out of the data and its analysis and jot them as ‘Crude Morbidity Curves’.

persons who got admitted into different area hospitals; however such numbers were very few and negligible. Hence, for this pilot study, we may take that “E” belongs and corresponds to the same population of “P”. CMoRs are calculated for each age group, for each gender, and also for each year for each location. This would bring out the regional variations. However, this

preliminary report proposes to present the CMoRs and the graphs only for the entire data and not location-wise. The analysis of the regional variations will be done as a second stage to this Study. The Table given below shows the CMoRs for the entire data of 21437 of all the five locations and for the two years. The graphical representation of the above CMoRs is also given there under (Table 4):

CRUDE MORBIDITY RATES (CMoR) Based on Census Population of all Five Locations TOT.POP.

CMoR per

TOT.POP.

CMoR per

TOT.POP.

AGE

MALES

MALES

LAC POP. FEMALES

FEMALES

LAC POP. TOTAL

CMoR per LAC POP. TOTAL

0-4 5-9 10 - 14 15 - 19 20 - 24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59 60 - 64 65 - 69 70 - 74 75 - 79 80 - 84

650483 889346 877268 765874 691794 636849 550581 528771 437429 366794 296738 176448 192169 104690 92749 34490 27112

145.02 45.89 58.17 75.55 127.64 140.71 137.86 161.99 175.05 211.39 288.79 338.09 390.95 412.19 447.97 437.79 166.28

625668 851608 810383 709801 682431 683947 517351 525796 368058 334667 263319 191011 206253 123767 93462 34569 33496

113.47 35.65 45.43 76.32 101.90 93.78 89.55 86.50 108.34 116.92 159.38 117.31 195.00 157.61 214.83 191.46 197.92

1276151 1740954 1687651 1475675 1374225 1320796 1067932 1054567 805487 701461 560057 367459 398422 228457 186211 69059 60608

129.54 40.88 52.04 75.92 114.89 116.50 114.58 124.54 144.69 166.53 228.33 224.28 289.86 274.93 330.93 314.37 134.11

TABLE 4

The number of events (E) of morbidity incidences for each age group of a particular location is expressed as a ratio to the one-lac population of the total census population (P) of the respective location. CMoR = (E / P) × 100000 It is generally believed and observed that people belonging to one particular area of population will get admitted to the nearest hospital only and hence it can be construed that “E” and “P” above belong to the same population. Here, in this study respective “P” is the census population of the respective districts of the locations (namely, Secunderabad, Hyderabad, Warangal, Visakhapatnam and Kurnool). Indeed there were a few ‘admissions’ observed from places of residence of the

GRAPH 2

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research paper The above graph (Graph 2) suggests that there seems to be certain ‘synchronicity’ in the Crude Morbidity Rates for ages 0 to 24 among the male, female and also for the total combined events of morbidity incidence. Interestingly, the same trend of synchronicity was observed across all the five locations, which will be discussed at the second stage report to this study. The above curves were fitted to standard curves, statistically and the picture that emerged is given later. The functions for these curves are given below: y (males) = – 7 E.– 06 x5 + 0.001 x4 – 0.094 x3 + 2.919 x2 – 35.57 x + 197.7 R2 = 0.981

in females like vulnerable infant age, puberty, child bearing and menopause ages involved, requiring females to ‘resist’ morbidity in longer durations.

There are regional variations observed, urban populations having higher morbidity incidence than the rural populations.

• Whereas there are no such marked age brackets in which females experience average duration differences, though the same age groupings of their physiological manifestations (0 – 5; 15 – 19; 25 – 29; 35 – 39; 45 – 49) take place females experience higher average durations (for ‘death’) than males. • The population based crude morbidity rates calculated by this pilot study seem to have set patterns – even gender wise - as can be seen from the curves fitted to these CMoRs, and hence may be useful perhaps to possibly predict morbidity incidences for ages in any given population. This comment also needs high caution before conducting further investigation.

y (females) = – 2 E.– 06 x5 + 0.000 x4 – 0.034 x3 + 1.183 x2 – 16.01 x + 126.6 R2 = 0.864 y (total) = – 5 E. – 06 x5 + 0.001 x4 – 0.073 x3 + 2.316 x2 – 28.69 x + 169.6 2

R = 0.960

Conclusions • The Mean Ages, Median Ages and the Modal Ages across the census populations of several locations are all less than middle age 40. • The Morbidity events seem to have Bimodal Ages across the various populations, one around age 2 (pediatric) and the other prime youth of around 22 years. • There are gender variations of morbidity incidence for males and females, the former being higher than the later. • The lesser female morbidity variation is suggestive of and echoes the normally observed lesser mortality rates of females. • There are regional variations observed, urban populations having higher morbidity incidence than the rural populations. This comment needs caution because of the variations among these cited populations in their literacy, awareness and availability levels of the health conscience.

• However, among and between the rural regions there seems to be variations of incidence of morbidity. • Outcomes of the events of the morbidity incidence seem to be following certain patterns, again among and in between the several populations. • The most striking result of this study is the negative outcome of the events, namely the ‘deaths’. • The percentage of deaths of the events under study is strikingly 12.5% for all the populations and all the locations. • Females seem to take same or slightly longer average durations to get ‘relieved’ than males • Females seem to take same or slightly longer average durations to ‘die’ as men take during hospitalization and treatment • At greater part of the age groups from (age 0 to age 49) females take longer average durations to get ‘relieved’ than men, which also seems to be the normally and universally observed feature. This may be because of the physiologically developing age bracket

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• The crude morbidity curves and the functions of these curves need more corroboration, though the respective RCoefficients are high. Thus, these preliminary results of the present pilot study show that all the null hypotheses of the study are not proved, and therefore: • There is a set pattern in the morbidity rates, jointly and severally, with reference to age, gender and / or location of the population; • Gender variations do affect the incidence of the morbidity rates across the population; • Geographical variations do affect the incidence of the morbidity rates of a given population; • There is a set pattern in the outcome distribution across male / female gender divide.

The author is Senior Faculty, Institute of Insurance and Risk Management, Hyderabad.

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IRDA Journal (Vol 7 Iss 4) FINAL web copy.pmd40

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Æ“ LzÃz qzfi “{ \“ÁÊ \ÁzuQ™ ü§ãá Nz˛ uƒYÁ∫ N˛Áz úÓm| øú Ãz ¬ÁTÏ uN˛ÆÁ \ÁL@ EuáN˛ÁÊΔo: uƒußëÁ N˛Á∫mÁı Ãz Æ“ §Á“∫ “y ∫“oz “¯@ GnúÁt ™ı åƒyå EåÏÃÊáÁå u\ÃÃz ƒ“ §‰gz ú{™Áåz ú∫ ¬ÁzTÁı ú∫ üßÁƒ ‰gÁ¬ ÃNı˛ osÁ ¬ÁzT §y™Á N˛y EÁƒ≈ÆN˛oÁ \ÁåÁ ÃNz˛ Æ“y Ã™Æ N˛y ™Á}T “{@ Æ“ FoåÁ EÁÃÁå å“Î “{ u\oåÁ utQÁF| tzoÁ “{@ \ÁTøN˛oÁ ú{tÁ N˛∫åz Nz˛ u¬L uƒußëÁ u“oáÁ∫N˛Áı N˛Áz N˛F| üuN¿˛ÆÁ ¬Áåz “ÁzTy \Áz \ø∫y å“Î üsÁ Nz˛ EåÏÃÁ∫ “y “Áz ¬zuN˛å üßÁƒΔÁ¬y “Ázåy YÁu“Æz@ çÃz ™“nƒúÓm| “{ uN˛ LzÃz, üÆÁà uN˛Æz \ÁL uN˛ Fà ßÁ Á osÁ üN˛Á∫ Ãz ÃÊtzΔ ßz\Á \ÁL@ u\ÃÃz çÃz uúZ‰gÁ √ÆuO˛ ßy FÃz Ù^ ÃNz˛@ Æ“ LN˛ §‰gÁ N˛ÁÆ| “{ osÁ Ãßy u“oáÁ∫N˛Áı Ãz FÃNz˛ üuo uå…eoÁ N˛y EÁƒ≈ÆO˛Á “{@ \å|¬ Nz˛ Fà EÊN˛ Nz˛ Nz˛ã¸ u§ãtÏ ™ı >§y™ÁN˛oÁ| Nz˛ ÃÁ™Áu\N˛ osÁ T¿Á™ym tÁuÆnƒ< “{@ uƒuÆ ÃzƒÁEÁzÊ ™ı uƒõúm Eúåz EÁú ™ı §‰gy YÏåÁ{oy “{ EÁ{∫ \§ Æ“ ßÁ∫o ™ı §y™Á qzfi ™ı EÁoÁ “{ FÃN˛y YÏåÁ{oy EÁ{∫ ßy §‰j \Áoy “{@ >>§y™Á uƒõúmå>> \å|¬ Nz˛ ET¬z EÊN˛ Nz˛ Nz˛ã¸ u§ãtÏ ™ı “ÁzTÁ@

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Apr 2009

4/8/2009, 5:38 PM

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ƒo|™Áå tÁ{∫ ƒÁN˛F| ™ı §z“t N˛ueå “{, ¬zuN˛å FÊ≈ÆÁz∫ıà NÊ˛úuåÆÁÊ FÃN˛Á ™ÏN˛Á§¬Á N˛∫åz Nz˛ u¬L N˛ÁÆ|NÏ˛Δ¬oÁ ™ı F\Á¢˛Á EÁ{∫ åF| uƒúmå ∫måyuo §åÁåz ™ı N˛∫ ÃN˛oy “{@ FÊ≈ÆÁz∫ıà NÊ˛úuåÆÁı N˛Áz Fà N˛ueå Ã™Æ N˛Á ÃtÏúÆÁzT N˛∫åÁ YÁu“L@ »y \z “u∫ åÁ∫ÁÆm Fã≈ÆÁz∫ıà ∫zTϬzb∫y LÊg gzƒ¬ú™ıb EsÁ}u∫by, ßÁ∫o

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Nz˛ §Át N˛y çÃz §‰gy ƒ{uæÁN˛ ™Êty N˛y ™Á∫ ^z¬ ∫“z “¯@ »y u\™ ¢z˛¬{“Áby| uƒ™Êfiy, N˛åÁgÁ Ã∫N˛Á∫

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IRDA Journal (Vol 7 Iss 4) FINAL web copy.pmd41

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Apr 2009

4/8/2009, 5:38 PM

GúßÁzO˛Á

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IRDA Journal (Vol 7 Iss 4) FINAL web copy.pmd42

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FÊ≈ÆÁz∫ıà ÃzMb∫ N˛Á uƒN˛Áà “{@ uúZ¬z NÏ˛t ÃÁ¬ Nz˛ tÁ{∫Áå t{Δ ™ı Ã∫N˛Á∫y FÊ≈ÆÁz∫ıà NÊ˛úuåÆÁı Nz˛ ÃÁs-ÃÁs üÁFƒzb FÊ≈ÆÁz∫ıà NÊ˛úuåÆÁı Nz˛ GtÆ Ãz GnúëÁ üuoÀúáÁ| Nz˛ ¢˛¬Àƒøú FÊ≈ÆÁz∫ıà ÃzMb∫ N˛Á uƒN˛Áà “ÏEÁ@ uå™í N˛Á∫m ßy FÃNz˛ uƒN˛Áà ™ı ™ttTÁ∫ §åı@ •

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Apr 2009

4/8/2009, 5:38 PM

GúßÁzO˛Á

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EÁáÁ∫ ú∫ ÃzYÁu¬o “ÁzoÁ “{@ ¬§uN˛ FÊ≈ÆÁz∫ıà Ãz M b∫ ™ı EÁF| [ÆÁtÁo∫ NÊ ˛ úuåÆÁÊ EÁT, FÊ\yuåÆu∫ÊT EÁ{∫ ™Ázb∫ÆÁå ÃʧÊáy u§\åà ™ı ÃÊßÁƒÁåÁLÊ o¬ÁΔ ∫“y “¯@ \§uN˛ åÁ}å b{u∫¢˛ u§\åà ¬ÁFå GnúÁt EÁ{∫ ÃzƒÁEÁzÊ Nz˛ N˛F| qzfiÁı ™ı EÁTz EÁF|@ F∫gÁ åz 2007 ™ı üÁF\ EÁzúuåÊT N˛y EåÏ™uo ütÁå N˛∫ ty@ E§ t{Δ N˛y FÊ≈ÆÁz∫ıà NÊ˛úuåÆÁÊ ƒ{uæÁN˛ §Á\Á∫ Nz˛ EåÏÃÁ∫ Eúåz GnúÁtÁı N˛Áz GúßÁzO˛ÁEÁzÊ N˛y \ø∫oÁı Nz˛ ™Òzå\∫ o{ÆÁ∫ N˛∫ ∫“y “¯@ “Á¬ “y ™ı ugt{∫zu¢Ê˛T Ãz §y™Á NÊ˛úuåÆÁı N˛Áz GúßÁzO˛EÁzÊ N˛y \ø∫o Nz˛ EåÏÃÁ∫ GnúÁtÁı úu∫ƒuo|o N˛∫åz ™ı ÓÁÆoÁ üÁõo “ÏF| “{@ Own damage åz ZÏb N˛y EåÏ™uo, Nz˛ ÃÁs-ÃÁs ÙÀo EÁ{˘ÁzuTN˛ \ÁzuQ™, ™Ázb∫ N˛y ΔoÁz˙ EÁ{∫ N˛ƒ∫z\ ™ı ßy EåÏN˛Ó ¬ §t¬Áƒ uN˛ÆÁ@ FÙı Motor own damage (OD) Baseline wordings covers

LN˛ \åƒ∫y 2009 Ãz “y üßÁƒ “ÏEÁ “{@ §y™ÁN˛oÁ|EÁzÊ N˛Áz E§ úÓƒ| Nz˛ Ãyu™o §y™Á ¬Áß N˛y §\ÁL [ÆÁtÁ \ÁzuQ™ N˛ƒ∫ Nz˛ EuáN˛Á∫ utL TL EÁT, FÊ\ÁzuåÆu∫ÊT, EÁF|LEÁ∫, Motor OD ™ı Euou∫O˛ üyu™Æ™ \™Á N˛∫åz ú∫ §y™ÁN˛oÁ| N˛Áz Add-on-cover FÊ\yzuåu∫ÊT ™ı Y¬ ÃÊúu ßy ΔÁu™¬@ úzb~Áz Nz˛u™N˛¬ G˘ÁzT Ùzo Ãßy G˘ÁzTÁı N˛Áz IAR Product N˛y EåÏ™uo ÃÁs “y úÓm| ƒoy| 200 N˛∫Áz‰g øúL N˛y ãÆÓåo™ TSI Limit ßy Qn™ N˛y TF|@ GO˛ Ãz 4 u§ãtÏEÁzÊ N˛Áz ZÁz‰g §y™ÁN˛oÁ| Àb{ãgg| N˛ƒ∫ ™ı §t¬Áƒ N˛“Î N˛∫ úÁLTÁ@ GtÁ“∫m Nz˛ u¬L ™Ázb∫ F≈ÆÁz∫ıà GúßÁzO˛Á E§ N˛ƒ∫ ¢˛ÁÆtz \{ à z Loss of use EÁ{ ∫ Waiver of depreciation N˛Áz ßy ¬z ÃNz˛TÁ@ u∫bz¬ FÊ≈ÆÁz∫ıà ÃzMb∫ ™ı Fà §t¬ÁƒÁı Ãz ÃN˛Á∫Án™N˛ ∫ƒ{ÆÁ üÁõo “ÁzTÁ@ uƒußëÁ FÊ≈ÆÁz∫ıà üÁzgMb N˛y Coupling Ãz N˛ƒ∫z\ u™¬ \ÁLTÁ@ FÃÃz N˛F| úÁu¬Ãy \Á∫y N˛∫åz ™ı “Ázåz ƒÁ¬Á üΔÁÃuåN˛ QY| ßy §YzTÁ@ EÊo∫∫Á…b~yÆ FÊ≈ÆÁz∫ıà ™ÁNz˛|b ™ı Gú¬£á N˛ƒ∫

irda journal

IRDA Journal (Vol 7 Iss 4) FINAL web copy.pmd43

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N˛Áz E§ ßÁ∫o ™ı \Á∫y úÁ}u¬Ãy ™ı (Incorporate) N˛∫ N˛ƒ∫z\ Nz˛ tÁÆ∫z N˛Áz EÁ{∫ §‰jÁÆÁ TÆÁ “{@ E§ ugb{u∫u¢Ê˛T ™ÁNz˛|b ™ı Æz ÃÏuƒáÁ Add-oncover Nz˛ øú ™ı u™¬ ÃNz˛Ty ugb{u∫¢˛ÁFg ™ÁNz˛|b GúßÁzO˛ÁEÁzÊ Nz˛ u¬L ™ttTÁ∫ N{˛Ãz?

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improves diverse risk writing appetite variegated products.

Apr 2009

4/8/2009, 5:38 PM

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irda journal

IRDA Journal (Vol 7 Iss 4) FINAL web copy.pmd44

EƒÃ∫ ™ÁÊT EÁ{∫ §{˘ÁuåN˛ N˛Á∫N˛ ßy ΔÁu™¬ “{@ ugbzu∫u¢Ê˛T Nz˛ tÁ{∫ ™ı §y™ÁN˛oÁ|EÁzÊ N˛Áz ünÆq uƒúmå N˛Á ÃÁ™åÁ N˛∫åÁ ßy ú‰gzTÁ@

42

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Apr 2009

4/8/2009, 5:38 PM

uåƒzΔ

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IRDA Journal (Vol 7 Iss 4) FINAL web copy.pmd45

43

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Apr 2009

4/8/2009, 5:38 PM

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irda journal

IRDA Journal (Vol 7 Iss 4) FINAL web copy.pmd46

§y™Á EuáuåÆ™ 1938 Nz˛ EãoT|o åÁ™ÁÊN˛å LƒÊ ÙåÏtzΔå N˛Á N˛™Δ: áÁ∫Á 39 LƒÊ áÁ∫Á 38 ™ı uƒÀowo üÁƒáÁå “{@ EÁFÆz, ünÆzN˛ LƒÊ ç N˛y ߬ÁF| Nz˛ u¬L Få üÁƒáÁåÁzz Nz˛ Y¬oz “™ Eúåz u¬L úÓm|øúzm \ÁåN˛Á∫y üÁõo N˛∫z oÁuN˛ ÙÏuYo åÁ™ÁÊN˛å EsƒÁ ÙåÏtzΔå Nz˛ EßÁƒ ™ı tÁƒztÁ∫ N˛Áz ÀƒnƒuáN˛Á∫-ü™Ám Nz˛ u¬L tÁƒÁ uåúbÁ∫z ™ı EåÁƒ≈ÆN˛ uƒ¬©§ LƒÊ N˛ueåÁFÆÁı N˛Á ÃÁ™åÁ åÁ N˛∫åÁ ú‰gz@

44

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Apr 2009

4/8/2009, 5:38 PM

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MÆÁ tÁƒÁ ßÓToÁå Nz˛ §Át åÁu™oy §y™Á ∫ÁuΔ N˛Á ÀƒÁ™y §å \ÁoÁ “{? å“Î! GÄÁo™ ãÆÁÆÁ¬Æ åz <<Δ∫§oy tzƒy §åÁ™

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\yƒå §y™Á uåT™>> ™Á™¬z ™ı ty TF| Eúåy øu¬ÊT Ãz Æz ÀsÁuúo N˛∫ utÆÁ “{ uN˛ åÁu™oy (§y™Á ∫ÁuΔ N˛Á) ÀƒÁ™y å“Î §å \ÁoÁ ƒu¡N˛ ƒ“ N˛ÁåÓåy GÁuáN˛u∫ÆÁı N˛Áz ßÓN˛oÁå N˛∫åz Nz˛ u¬L G∫tÁÆy “{@ GÃN˛y (åÁu™oy N˛y) útƒy oÁz Áz§y™Á N˛©úåy N˛Áz Nz˛ƒ¬ §y™Á ∫ÁuΔ üÁõo N˛∫åz Nz˛ u¬L ∫Ãyt tzåÁ ™Áfi “{@

45

Apr 2009

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(∆z  ßÁT ET¬z EÊN˛ ™ı)

ruΔ ound qmup The 11th Global Conference of Actuaries (GCA) was held jointly by the Institute of Actuaries of India (IAI) and International Actuarial Association (IAA) on 12th and 13th February, 2009 at Mumbai. The focus of the conference was “Global Frontiers in Risk Management”.

Mr. J. Hari Narayan, Chairman, IRDA speaking during the inaugural session.

Seen in the photograph at one of the parallel sessions are (L to R): Mr. J.S. Salunkhe, ex-Chairman, LIC of India; Mr. Kouichi Kojima, President, Life Insurance Association of Japan (LIAJ); and Mr. DNKLNK Chakravarthi, Asst. Director (Actuary), IRDA.

Mr. Prabhat Kumar Maiti, Deputy Director (Actuary), IRDA presenting a paper at the conference.

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round up The Associated Chambers of Commerce and Industry of India (ASSOCHAM) organized a one-day conference on Pension and Retirement Planning on 19th February, 2009 at New Delhi.

Dr. R. Kannan, Member (Actuary), IRDA delivering a speech at the conference.

IRDA conducted a day-long workshop on Consumer Grievance Management in Indian Insurance Industry on 27th February, 2009 at Hyderabad.

Mr. K. Rangabhashyam, Insurance Ombudsman, Kolkata lighting the lamp to mark the inauguration of the conference. Also seen in the picture are (from L to R): Mr. Rakesh Kacker, Additional Secretary, Ministry of Consumer Affairs, Food & Public Distribution; Mr. J. Hari Narayan, Chairman, IRDA; and Mr. G. Prabhakara, Member (Life), IRDA.

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statistics - non-life insurance

Report Card: General GROSS PREMIUM UNDERWRITTEN FOR AND UP TO THE MONTH OF FEBRUARY, 2009 (Rs.in Crores)

JANUARY INSURER Royal Sundaram Tata-AIG Reliance General IFFCO-Tokio ICICI-lombard Bajaj Allianz HDFC ERGO General Cholamandalam Future Generali $ Universal Sompo # Shriram General @ Bharti AXA General @ New India National United India Oriental PRIVATE TOTAL PUBLIC TOTAL GRAND TOTAL

APRIL - FEBRUARY

2008-09

2007-08

65.07 63.47 140.74 96.18 215.89 193.08 30.46 56.00 20.31 7.29 25.44 6.44 415.95 308.95 317.01 302.73 920.37 1344.64 2265.02

61.54 67.99 136.10 100.82 239.78 225.06 15.87 43.86 2.93 0.00 0.00 0.00 403.46 344.93 287.89 283.16 893.96 1319.44 2213.39

2008-09 728.10 813.19 1776.64 1257.71 3255.56 2407.50 298.43 643.97 170.45 19.35 107.38 20.74 4982.24 3867.90 3808.08 3564.55 11499.02 16222.77 27721.79

2007-08 * 627.74 740.27 1809.74 1028.29 3142.89 2150.52 201.85 479.38 8.37 0.00 0.00 0.00 4759.37 3640.99 3368.97 3506.74 10189.04 15276.07 25465.10

GROWTH OVER THE CORRESPONDING PERIOD OF PREVIOUS YEAR 15.99 9.85 -1.83 22.31 3.59 11.95 47.85 34.33 1937.09

4.68 6.23 13.03 1.65 12.86 6.20 8.86

SPECIALISED INSTITUTIONS: 1.Credit Insurance ECGC

65.99

59.46

665.53

590.41

12.72

2.Health Insurance Star Health & Allied Insurance Apollo DKV

10.11 4.72

4.99 0.33

494.49 42.73

162.77 0.94

203.79 4451.79

Health Total

14.83

5.32

537.22

163.71

228.15

3.Agriculture Insurance AIC

80.41

66.67

733.53

766.83

-4.34

Note: $ Commenced operations in November, 2007. # Commenced operations in February, 2008.

@ Commenced operations in July, 2008. * Figures revised by insurance companies

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events 14 – 15 Apr 2009 Venue: Dubai

World Takaful Conference By Dubai International Financial Centre

15 Apr 2009 Venue: Macau

APLIC By Asia Pacific Financial Services Association

19 – 23 Apr 2009 Venue: Orlando, USA

RIMS Conference By Risk & Insurance Management Society

20 – 25 Apr 2009 Venue: NIA, Pune

Techno Marketing in General Insurance By National Insurance Academy

23 – 25 Apr 2009 Venue: NIA, Pune

Actuarial Practices in Life Insurance By National Insurance Academy

28 – 30 Apr 2009 Venue: Tunis, Tunisia

3rd MENA CEO Insurance Summit By Asia Insurance Review, Singapore

04 – 09 May 2009 Venue: NIA, Pune

Effective Underwriting in General Insurance By National Insurance Academy

14 – 15 May 2009 Venue: Singapore

10th Asian Conference on Bancassurance & Alternative Distribution Channels By Asia Insurance Review, Singapore

18 – 20 May 2009 Venue: NIA, Pune

Management of Change By National Insurance Academy

25 – 27 May 2009 Venue: Hong Kong

3rd Asian Insurance CFO Summit By Asia Insurance Review, Singapore

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RNI No: APBIL/2002/9589

“

view point The hyper-efficiency of information flows has in itself introduced new uncertainties as sentiment shifts rapidly and abrupt loss of confidence becomes self-reinforcing. Mr Heng Swee Keat Managing Director, Monetary Authority of Singapore

The International Association of Insurance Supervisors (IAIS) is taking an active role to closely monitor financial crisis developments and its particular impact on the global insurance sector. Mr Peter Braumuller Chair of the IAIS Executive Committee

These are difficult times, but I see this as an opportunity for all insurance companies to take stock, build on respective efficiencies, devise new marketing strategies, do some housekeeping and become lean and fit. Mr J Hari Narayan Chairman, Insurance Regulatory and Development Authority (India)

Today we are in the midst of a synchronized global recession. And we are also in the midst of the worst financial market crisis since the 1930s. Mr Jim Flaherty Minister of Finance, Government of Canada

We have a long history of consumer protection, conservative solvency oversight and market stability. Any system of financial stability regulation can, and must, build on this proven regime. Ms Therese M (Terri) Vaughan NAIC Chief Executive Officer

The heady days over much of this decade which saw an unprecedented build-up in risk appetites and borrowings by low interest rates; and an explosion in complex and opaque financial instruments, are gone. Mr John F Laker Chairman, Australian Prudential Regulation Authority (APRA)

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”